Compensation Advisory Partners (CAP) assessed human capital actions taken by companies in the Financials sector in response to the COVID-19 pandemic. Key findings include:
- The Financials sector was moderately impacted by the COVID-19 pandemic, with 27% of companies in the S&P Composite 1500 Index taking human capital actions.
- Banks, which often have retail operations, reported the most actions (35%) – many of which were positive for employees, such as expanded time off and healthcare benefits, and one-time bonuses and additional pay for on-site workers
- The five most prevalent human capital actions by Financial Sector are expanded benefits programs, one-time bonuses for non-executives, additional payments for on-site employees (non-executives), reducing CEO base salary, and guaranteed pay continuity for non-executives
- Executive salaries were reduced, particularly in Diversified Financials and Insurance:
- Median salary reductions were 30 percent for chief executive officers (CEOs), while median salary reductions for other executives were 20 percent.
- For boards of directors, pay was cut by a median of 28 percent.
The PDF of the report provides additional data for the Financials sector.
The human capital actions that CAP is tracking include pay cuts; changes to annual and long-term incentives; furloughs; workforce reductions; suspended 401K matches; enhanced health and welfare benefits; additional pay for frontline workers; pay continuity; and workforce expansions. CAP will continue to monitor corporate public announcements of COVID-19 actions.
Compensation Advisory Partners (CAP) assessed human capital actions taken by companies in the Communication Services sector in response to the COVID-19 pandemic. Key findings include:
- The Communication Services sector and its Telecommunication Services and Media & Entertainment industries were hit significantly by the COVId-19 pandemic.
- 54% of the Communication Services companies in the S&P Composite 1500 Index reported human capital actions in response to the pandemic. In contrast, 41 percent of companies in the S&P 1500 reported actions.
- Of the industries in the Communication Services sector, Media & Entertainment was particularly hard hit, with 59 percent of companies reporting human capital actions. In the Telecommunication Services industry, 38 percent of companies took human capital actions in response to COVID-19.
- Pay reductions for executives and board members are the most prevalent human capital actions in the Communication Services sector.
- Median salary reductions were 50 percent for chief executive officers (CEOs), while median salary reductions for other executives were 20 percent.
- For boards of directors, pay was cut by a median of 25 percent.
- In addition to pay reductions for executives and boards, the most prevalent human capital actions in the Communication Services sector were furloughs, workforce reductions and suspended raises and/or bonuses.
The PDF of the report provides additional data for the Communication Services sector.
The human capital actions that CAP is tracking include pay cuts; changes to annual and long-term incentives; furloughs; workforce reductions; suspended 401K matches; enhanced health and welfare benefits; additional pay for frontline workers; pay continuity; and workforce expansions. CAP will continue to monitor corporate public announcements of COVID-19 actions.
Compensation Advisory Partners (CAP) assessed human capital actions taken by companies in the Industrials sector in response to the COVID-19 pandemic. Key findings include:
- The Industrials sector and its Capital Goods, Commercial and Professional Services, and Transportation industries were hit hard by COVID-19, as reflected by the percentage of companies taking actions in response to the pandemic.
- Half of the Industrials companies in the S&P Composite 1500 Index reported human capital actions in response to the pandemic. In contrast, 39 percent of companies in the S&P 1500 reported actions.
- Of the industries in the Industrials sector, Transportation was particularly hard hit, with 69 percent of companies reporting human capital actions. In the Commercial and Professional Services industry, 51 percent of companies took human capital actions in response to COVID-19, while 45 percent of companies in the Capital Goods sector took actions.
- Pay reductions for executives and board members are the most prevalent human capital actions in the Industrials sector.
- Median salary reductions were 38 percent for chief executive officers (CEOs), while median salary reductions for other executives were 20 percent.
- For boards of directors, pay was cut by a median of 30 percent. The range of director pay cuts is similar to the range of CEO salary cuts.
- In addition to pay reductions for executives and boards, the most prevalent human capital actions in the Industrials sector were furloughs, pay reductions for employees, and workforce reductions.
The PDF of the report provides additional data for the Industrials sector.
The human capital actions that CAP is tracking include pay cuts; changes to annual and long-term incentives; furloughs; workforce reductions; suspended 401K matches; enhanced health and welfare benefits; additional pay for frontline workers; pay continuity; and workforce expansions. CAP will continue to monitor corporate public announcements of COVID-19 actions.
In August 2019, the Business Roundtable came out with a new statement on the purpose of a corporation. For the first time, the focus expanded from serving shareholders and creating long-term value to serving all stakeholders by delivering value to customers, investing in employees, dealing fairly and ethically with suppliers and supporting the environment and people in the community.
While this statement is bold, it is a response to the increased focus by shareholders on Environmental, Social and Governance (ESG) matters. Investors are evaluating how companies are addressing ESG issues and their impact on the long-term sustainability and value creation for each organization. Some of the largest institutional investors, including BlackRock and State Street, have put boards on notice that they will be holding directors and company management accountable for how ESG issues are managed. The major proxy advisory firms (Institutional Shareholder Services and Glass Lewis) now provide their clients with ESG ratings for each company they evaluate, highlighting related risks to investors in these areas.
What should board members generally and compensation committee members specifically be doing to address ESG? Each board should define what ESG means for their organization as each company has a unique operating model or business strategy that may include ESG initiatives to varying degrees. Many boards are doing this. We have seen the creation of ESG committees of the board or modifications to committee charters to incorporate ESG oversight (for example, many compensation committees now have oversight of diversity and inclusion). Once companies and boards define what ESG means for them, it will be important to articulate the following:
- Objectives for each of these initiatives
- Criteria for assessing performance against these
objectives - Approaches for holding management accountable
The governance area of ESG has improved in the past decade, with many organizations focused on strengthening shareholder rights and demonstrating the alignment of pay and performance in response to input from shareholders and shareholder advisory
groups. A strong and independent board is a key factor in governance and across industries, and many boards have embraced independent director sessions, board refreshment and balanced tenure, skills and diversity. Showcasing of governance enhancements has become common in proxy statements, and we expect companies to continue to maintain strong governance practices.
The environmental aspects of ESG have been more common in certain industries, such as energy, utilities and manufacturing, though the focus on the environment is gaining momentum across industries.
Companies are focusing on how they manage climate change, emissions, spills, water conservation and other sustainability efforts. Organizations such as the Sustainability Accounting Standards Board have developed standards so companies and investors can assess the risks and opportunities across industries.
The social aspects of ESG have focused on human capital and the impact of a company’s products or policies on society. The topics of human-capital management, employee engagement and gender pay equity have increasingly worked their way into board meeting conversations, with gender pay equity raising the fundamental issue of representation and inclusion. These statistics are measurable, and detailed analysis over time can help hold management accountable and demonstrate progress. It is now very common for compensation committees and, in some instances, the full board to receive updates on representation across an organization.
A natural question is to what extent should ESG factors be incorporated into incentive compensation plans? CAP reviewed the proxy statements of 2020 early filers (companies that filed their most recent proxy statement between December 2019 and January 2020) and found that approximately one-third incorporate some type of ESG metric in their executive compensation plan decision-making. The types of metrics varied significantly by industry as not all aspects of ESG will be critical to every organization’s business strategy. For example, carbon emissions may be more material for an energy company than a professional services company. When incorporating ESG factors, most companies in our review applied the metric to their annual incentive plans using a qualitative assessment of the factor. The metric generally reflected a small percentage of the overall weighting (5 percent–15 percent of the total incentive). Companies and boards should discuss the best ways to hold management accountable for ESG progress, including incorporating such progress into incentive plan performance.
Every board and management team should identify which ESG matters are material to their organization and understand how they should be approached and monitored and how to communicate their approach to investors. While the Covid-19 pandemic in 2020 has turned the focus of management on business continuity and crisis management, we expect ESG matters will continue to be prominent factors considered by institutional investors, proxy advisory firms and other stakeholders. It will be important for companies to define the ESG factors that have the greatest impact on their business as transparency and disclosure on how ESG matters are addressed have become increasingly essential parts of shareholder engagement.
The SEC proposed changes to the proxy voting advice and the procedural requirements and resubmission thresholds for shareholder proposals on November 5, 2019. The proposed rules on both topics are in the comment phase for 60 days from publication.
Proposed Changes Around Proxy Voting Advice
SEC stated that the changes are intended “to help ensure that investors who use proxy voting advice receive more accurate, transparent, and complete information on which to make their voting decisions, in a manner that does not impose undue costs or delays that could adversely affect the timely provision of proxy voting advice.” The proposed changes would have the following impact on proxy advisors:
- Proxy advisors may be required to disclose any conflicts of interest, which will be defined by the SEC
- Proxy advisors will have to provide issuers with an opportunity to review voting advice based on timing of the proxy statement filing:
- 45 to 25 days prior to the annual meeting date: at least three business days to review
- More than 45 days prior to the annual meeting date: at least five business days to review
- Less than 25 days prior to annual meeting date: not required to provide companies with a review
- Issuers will be able to request proxy advisors provide a hyperlink in the recommendation to shareholders to a statement by the issuer on their view of the proxy advice
Proposed Changes Around the Procedural Requirements and Resubmission Thresholds for Shareholder Proposals
The changes to the shareholder proposal requirements include a significant increase in the ownership requirements in order to qualify to submit a proposal:
Current ownership qualifications | Proposed ownership qualifications |
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In addition to the new ownership requirements, the SEC also proposed implementing new regulations for the potential resubmission of proposals:
Current proposal resubmission requirements | Proposed resubmission requirements |
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Finally, a provision to exclude a shareholder proposal from the ballot was also proposed. Proposals can now be excluded from ballots if such proposals meet the following:
- Voted on three or more times in five years; and
- Received less than half of the votes; and
- Declined in support by at least 10% over the previous year
An early look at the second year of CEO pay ratio disclosures shows that the ratios held steady for the overall sample, while on a company-by-company basis the ratio was quite volatile.
The 2019 Proxy Season has begun, and Compensation Advisory Partners (CAP) has done a comprehensive analysis of the second year of CEO pay ratio disclosures to identify what has changed and what trends are emerging. At a high level, CAP has found the following:
- CEO Pay Ratio: While CEO pay ratio summary statistics (e.g., 25th percentile, median, and 75th percentile) were flat across the sample, two-thirds of the sample companies had pay ratios that fluctuated up or down by more than 10 percent. The significant volatility in individual company pay ratios is masked in the overall sample, so proxy readers should not be surprised if a company’s pay ratio moved year-over-year.
- CEO Pay: CEO compensation increased 7 percent at median with two-thirds of CEO pay fluctuating by more than 10 percent. This may be driven by incentive compensation changing year to year, by CEO transitions and by changes in pension value calculations where applicable.
- Median Employee: Only 36 percent of companies used the same median employee year-over-year. For the companies that use the same median employee, the pay of that employee went up 7 percent at median. Where companies selected a new median employee, the year-over-year change in pay was 4 percent at median. This indicates that companies that want to maintain a lower CEO pay ratio may be better off keeping the same median employee from year to year if possible.
- Additional Disclosures: Despite interest expressed by some institutional shareholders in greater disclosure about the workforce, only 16 percent of companies disclosed additional information about the median employee (e.g., geographic location, role with the company, full-time vs. part-time, etc.). This is up from 12 percent of companies providing additional disclosures last year.
Methodology
CAP analyzed 201 of the first proxies filed in 2019 in order to study developing trends and examine differences from prior-year disclosures. The median company revenue of this sample is $2.1 billion. Detailed exhibits of findings are shown in appendix below this report.
Pay Ratio
CEO pay ratio at median, 25th and 75th percentiles are stable for this sample of companies when compared to the prior year.
Summary Statistics | 2017 | 2018 | % Change |
75th Percentile | 165x | 165x | 0% |
Median | 79x | 78x | -1% |
25th Percentile | 40x | 40x | +1% |
When looking at this sample on a company-matched basis, the percentage change of pay ratio was flat at median (-1%), 25th percentile (+1%) and 75th percentile (0%). Despite the flat year-over-year summary statistics, significant volatility in the pay ratio occurs at the individual company level, driven by both changes in pay levels for the CEO and in pay levels for the median employee. On a company-matched basis, about half of the sample had increases in the pay ratio, and half had decreases. When looking at the percentage change in the pay ratio, CAP found that two-thirds of companies had year-over-year changes in the pay ratio of more than +/-10 percent. This shows that while the total sample may seem unchanged year-over-year, individual companies have a good amount of variability that ends up being masked when the pay ratio data are viewed in aggregate. This individual company variation will likely be evident in coming years as well, as CEO and median employee pay can fluctuate significantly year to year. These factors coupled with the variety of methodologies that can be used continue to make drawing meaningful comparisons across companies difficult.
CEO and Median Employee Pay
CEO pay increased 7 percent at median, while the pay of the median employee increased 5 percent at median. While the increases in pay were similar at median, there was much greater volatility in CEO pay year-over-year with two-thirds of CEO pay fluctuating by more than 10 percent compared to one-third of median employees’ pay. This can be most easily explained by CEO’s having a much larger percentage of incentive compensation, generally, which may vary in magnitude year to year. Another source of fluctuation could be at companies where the CEO and/or the median employee participate in a pension plan, as increases to the discount rate used to value pension benefits can drive down Summary Compensation Table (SCT) pay. CEO and median employee pay moved in the same direction in 60 percent of companies, which shows at least some correlation between CEO pay and that of the typical employee. A correlation is more likely when the median employee is bonus and/or equity eligible, as more of his or her compensation is linked with the company and, therefore, the CEO’s.
Approximately 35 percent of companies used the same median employee for computing the CEO pay ratio as in the prior year. When a company used the same median employee as last year, the pay for that median employee increased between 7 percent and 8 percent at the median, 25th and 75th percentiles. This represents larger increases than when a company selected a new median employee, with median employee pay remaining relatively flat (0 to 4%). This indicates that re-selecting the median employee will more likely result in decreased or flat pay for the median employee, as salary typically increases over tenure, and incentive compensation tends to be modest for employees at this level. A decrease in median employee pay by more than 3 percent is twice as prevalent (27% versus 13%) at companies re-selecting their median employee. When a company selects a new median employee, they have the option of selecting a substantially similar employee from the previous year, seen approximately 20% of the time, or re-running the selection analysis in the current year, seen approximately 80% of the time.
Median Employee Pay | ||||||
Summary Statistics | Same Median Employee | Chose New Median Employee | ||||
2017 | 2018 | % Change | 2017 | 2018 | % Change | |
75th Percentile | $80,354 | $86,352 | +7% | $84,883 | $86,046 | +1% |
Median | $59,248 | $63,665 | +7% | $58,658 | $60,726 | +4% |
25th Percentile | $46,163 | $49,976 | +8% | $44,980 | $44,974 | -0% |
Disclosure Features
Much of the structure of pay ratio disclosure remained parallel with last year. Approximately 60 percent of companies made reference to the prior-year disclosure in some way. However, only about 15 percent of these companies cited last year’s pay ratio, CEO pay or median employee pay. The location of the pay-ratio disclosure within the proxy statement was nearly identical, with more than 90 percent of the disclosures being within or after the compensation tables. The inclusion of non-discriminatory benefits (i.e., benefits such as health insurance that are provided to all employees and are not included in CEO pay in the SCT) in the CEO and median employee pay calculation remained steady, with an estimated 14 percent of companies including non-discriminatory benefits in the calculation this year, compared with approximately 13 percent of the S&P 500 last year. Including these non-discriminatory benefits in both pay calculations deflates CEO pay ratio as the proportion of pay this makes up is systematically larger for the median employee than for the CEO. The measurement date used, adjustments to employee compensation (cost of living, annualizing compensation), use of a comparability disclaimer and statistical sampling were all very stable as well, with only a handful of companies adopting or removing these features. The use of supplemental ratios, descriptors of the median employee, and exemptions from the employee population had more varied disclosures when compared to prior year.
Supplemental ratios
Supplemental ratios were disclosed at roughly the same rate year-over-year, with approximately 10 percent of companies providing a supplemental ratio. One supplemental ratio is by far the most prevalent practice. Using an alternate CEO compensation calculation continued to be the most prevalent (63%) driver of disclosing a supplemental ratio. Where this feature differed was in the consistency of individual companies between last year and this year. If the supplemental ratio was disclosed in order to explain a one-time event (e.g. special equity award, CEO transition) then that company would likely not have a supplemental ratio for this year. If the company used a supplemental ratio to show an alternate CEO compensation amount (e.g. exclude pension value) or an alternate employee demographic (e.g. exclude non-U.S. employees), then the supplemental ratio was almost always disclosed again.
Description of Median Employee
This year’s sample of early filers saw a slight uptick in the percentage of companies (16%) that provided any description of their median employee compared to last year’s early-filer sample (12%) and the S&P 500 (14%). These descriptions vary in detail but often provide insights into who the median employee is. Geographic location of employment (76%) and the role within the company (48%) are the two most common descriptors, but these are often paired and/or supplemented with detail around employment type (full-time versus part-time) and pay type (salaried versus hourly).
Exemptions from Employee Population
Similar to the use of supplemental ratios, the use of exemptions from the employee population when determining the median employee remained consistent (~37%) between last year and this year. Applying multiple exemptions is not uncommon (~20%), and the De Minimis exemption, whereby a company may exclude up to 5 percent of its non-U.S. employee workforce, continues to be the most commonly (64%) used case. Other exclusions included not considering employees gained from mergers and acquisitions (M&A) activity (33%), contractors (19%) and employees on a leave of absence (5%). When companies did not make the same exemptions again this year, either the company’s non-U.S. portion of its employee population is now over 5 percent, or an M&A event did not occur.
Looking Forward
Overall, the CEO pay ratio did not change materially at median. However, a closer look at the company-matched data shows that significant volatility in the CEO pay ratio occurred at individual companies. While there has not yet been a significant increase in supplemental disclosures outside of the proxy statement or additional disclosures about the median employee, such information may be disclosed more frequently in the future as pressure mounts from shareholders and institutional investors. Looking beyond the CEO pay ratio disclosure itself, shareholders and institutional investors definitely want more disclosure about companies’ human capital. Whether this information is provided through the CEO pay ratio disclosure or elsewhere remains to be seen.
Appendix
Year 2 vs Year 1 – Same Company Data
Overview – Total Sample
CEO Pay Ratio | 2017 | 2018 | % Change |
Summary Statistics (n=201) | |||
Maximum | 2483x | 2508x | +1% |
90th Percentile | 341x | 301x | -12% |
75th Percentile | 165x | 165x | 0% |
Median | 79x | 78x | -1% |
25th Percentile | 40x | 40x | +1% |
10th Percentile | 18x | 20x | +13% |
Minimum | 2x | 3x | +47% |
CEO Pay | 2017 | 2018 | % Change |
Summary Statistics (n=201) | |||
Maximum | $42,247,984 | $129,499,005 | +207% |
90th Percentile | $15,845,991 | $15,695,189 | -1% |
75th Percentile | $10,253,787 | $9,989,992 | -3% |
Median | $5,060,220 | $5,422,777 | +7% |
25th Percentile | $2,347,314 | $2,726,774 | +16% |
10th Percentile | $1,072,999 | $1,333,951 | +24% |
Minimum | $339,165 | $306,000 | -10% |
Median Employee Pay | 2017 | 2018 | % Change |
Summary Statistics (n=201) | |||
Maximum | $964,005 | $256,300 | -73% |
90th Percentile | $123,347 | $118,209 | -4% |
75th Percentile | $83,153 | $86,046 | +3% |
Median | $59,092 | $61,782 | +5% |
25th Percentile | $45,409 | $47,252 | +4% |
10th Percentile | $34,967 | $35,724 | +2% |
Minimum | $4,828 | $4,563 | -5% |
Overview – Disclosure Features
Makes Any Reference to Year 1 Disclosure |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Yes | 117 | 58% |
No | 84 | 42% |
Mentions Year 1 Pay Ratio, CEO Pay, or Median EE Comp |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Yes | 31 | 15% |
No | 170 | 85% |
Uses Same Median Employee as Year 1 |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Yes | 73 | 36% |
No – Reran Analysis | 105 | 52% |
No – Used Similar Employee as Year 1 | 23 | 11% |
Discloses Change(s) in Methodology from Year 1 |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Yes | 3 | 1% |
No | 198 | 99% |
CEO Pay & Median Employee Pay Movement from Year 1 |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Both Increase | 91 | 45% |
CEO Pay Increased & Median Employee Pay Decreased | 29 | 14% |
CEO Pay Decreased & Median Employee Pay Increased | 52 | 26% |
Both Decrease | 29 | 14% |
Overview – Companies Choosing To Use The Same Median Employee
CEO Pay Ratio | 2017 | 2018 | % Change |
Summary Statistics (n=73) | |||
Maximum | 1830x | 1511x | -17% |
75th Percentile | 157x | 147x | -6% |
Median | 90x | 84x | -7% |
25th Percentile | 45x | 44x | -3% |
Minimum | 10x | 7x | -30% |
CEO Pay | 2017 | 2018 | % Change |
Summary Statistics (n=73) | |||
Maximum | $42,247,984 | $129,499,005 | +207% |
75th Percentile | $10,845,759 | $9,793,261 | -10% |
Median | $5,060,220 | $5,658,238 | +12% |
25th Percentile | $2,926,176 | $2,828,289 | -3% |
Minimum | $545,525 | $607,332 | +11% |
Median Employee Pay | 2017 | 2018 | % Change |
Summary Statistics (n=73) | |||
Maximum | $186,172 | $191,473 | +3% |
75th Percentile | $80,186 | $85,704 | +7% |
Median | $59,092 | $62,150 | +5% |
25th Percentile | $46,370 | $50,226 | +8% |
Minimum | $5,237 | $6,348 | +21% |
Overview – Companies Selecting a New Median Employee
CEO Pay Ratio | 2017 | 2018 | % Change |
Summary Statistics (n=128) | |||
Maximum | 2483x | 2508x | +1% |
75th Percentile | 172x | 186x | +8% |
Median | 76x | 73x | -4% |
25th Percentile | 33x | 36x | +10% |
Minimum | 2x | 3x | +47% |
CEO Pay | 2017 | 2018 | % Change |
Summary Statistics (n=128) | |||
Maximum | $31,082648 | $29,118,118 | -6% |
75th Percentile | $10,030,633 | $10,168,771 | +1% |
Median | $4,933,902 | $5,172,842 | +5% |
25th Percentile | $2,175,523 | $2,662,381 | +22% |
Minimum | $339,165 | $306,000 | -10% |
Median Employee Pay | 2017 | 2018 | % Change |
Summary Statistics (n=128) | |||
Maximum | $964,005 | $256,300 | -73% |
75th Percentile | $84,883 | $86,046 | +1% |
Median | $58,659 | $60,726 | +4% |
25th Percentile | $44,980 | $44,974 | -0% |
Minimum | $4,828 | $4,563 | -5% |
How Pay and Pay Ratio Changed – Total Sample
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased | 100 | 50% |
Decreased | 96 | 48% |
Remained the Same | 5 | 2% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased | 119 | 59% |
Decreased | 81 | 40% |
Remained the Same | 1 | 0% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased | 143 | 71% |
Decreased | 58 | 29% |
Remained the Same | 0 | 0% |
How Pay and Pay Ratio Changed – Total Sample
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased by 25% or more | 39 | 19% |
Increased by 10% to 25% | 30 | 15% |
Increased by 3% to 10% | 22 | 11% |
Changed between -3% to 3% | 24 | 12% |
Decreased by 3% to 10% | 19 | 9% |
Decreased by 10% to 25% | 43 | 21% |
Decreased by 25% or more | 24 | 12% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased by 25% or more | 42 | 21% |
Increased by 10% to 25% | 39 | 19% |
Increased by 3% to 10% | 28 | 14% |
Changed between -3% to 3% | 24 | 12% |
Decreased by 3% to 10% | 17 | 8% |
Decreased by 10% to 25% | 28 | 14% |
Decreased by 25% or more | 23 | 11% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Increased by 25% or more | 11 | 5% |
Increased by 10% to 25% | 34 | 17% |
Increased by 3% to 10% | 66 | 33% |
Changed between -3% to 3% | 46 | 23% |
Decreased by 3% to 10% | 23 | 11% |
Decreased by 10% to 25% | 12 | 6% |
Decreased by 25% or more | 9 | 4% |
How Pay and Pay Ratio Changed – Companies Choosing To Use The Same Median Employee
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased | 27 | 37% |
Decreased | 43 | 59% |
Remained the Same | 3 | 4% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased | 42 | 58% |
Decreased | 31 | 42% |
Remained the Same | 0 | 0% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased | 61 | 84% |
Decreased | 12 | 16% |
Remained the Same | 0 | 0% |
How Pay and Pay Ratio Changed – Companies Choosing To Use The Same Median Employee
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased by 25% or more | 11 | 15% |
Increased by 10% to 25% | 5 | 7% |
Increased by 3% to 10% | 7 | 10% |
Changed between -3% to 3% | 10 | 14% |
Decreased by 3% to 10% | 8 | 11% |
Decreased by 10% to 25% | 18 | 25% |
Decreased by 25% or more | 14 | 19% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased by 25% or more | 13 | 18% |
Increased by 10% to 25% | 11 | 15% |
Increased by 3% to 10% | 11 | 15% |
Changed between -3% to 3% | 10 | 14% |
Decreased by 3% to 10% | 8 | 11% |
Decreased by 10% to 25% | 9 | 12% |
Decreased by 25% or more | 11 | 15% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=73) | ||
Increased by 25% or more | 6 | 8% |
Increased by 10% to 25% | 13 | 18% |
Increased by 3% to 10% | 33 | 45% |
Changed between -3% to 3% | 12 | 16% |
Decreased by 3% to 10% | 4 | 5% |
Decreased by 10% to 25% | 5 | 7% |
Decreased by 25% or more | 0 | 0% |
How Pay and Pay Ratio Changed – Companies Selecting a New Median Employee
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased | 73 | 57% |
Decreased | 53 | 41% |
Remained the Same | 2 | 2% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased | 77 | 60% |
Decreased | 50 | 39% |
Remained the Same | 1 | 1% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased | 82 | 64% |
Decreased | 46 | 36% |
Remained the Same | 0 | 0% |
How Pay and Pay Ratio Changed – Companies Selecting a New Median Employee
How Did Pay Ratio Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased by 25% or more | 28 | 22% |
Increased by 10% to 25% | 25 | 19% |
Increased by 3% to 10% | 15 | 12% |
Changed between -3% to 3% | 14 | 11% |
Decreased by 3% to 10% | 11 | 9% |
Decreased by 10% to 25% | 25 | 19% |
Decreased by 25% or more | 10 | 8% |
How Did CEO Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased by 25% or more | 29 | 23% |
Increased by 10% to 25% | 28 | 22% |
Increased by 3% to 10% | 17 | 13% |
Changed between -3% to 3% | 14 | 11% |
Decreased by 3% to 10% | 9 | 7% |
Decreased by 10% to 25% | 19 | 15% |
Decreased by 25% or more | 12 | 9% |
How Did Median Employee Pay Change? |
Prevalence |
Percentage |
Summary Statistics (n=128) | ||
Increased by 25% or more | 5 | 4% |
Increased by 10% to 25% | 21 | 16% |
Increased by 3% to 10% | 33 | 26% |
Changed between -3% to 3% | 34 | 27% |
Decreased by 3% to 10% | 19 | 15% |
Decreased by 10% to 25% | 7 | 5% |
Decreased by 25% or more | 9 | 7% |
Early Disclosures Year 2 vs Year 1
Overview – Total Sample
CEO Pay Ratio | Revenue
($mm) |
CEO Pay | Median Employee Pay | Pay Ratio | Number of Employees |
Summary Statistics (n=201) | |||||
Maximum | $170,756 | $129,499,005 | $256,300 | 2508x | 350,600 |
90th Percentile | $19,167 | $15,695,189 | $118,209 | 301x | 52,131 |
75th Percentile | $6,946 | $9,989,992 | $86,046 | 165x | 17,521 |
Median | $2,138 | $5,422,777 | $61,782 | 78x | 5,148 |
25th Percentile | $587 | $2,726,774 | $47,252 | 40x | 1,382 |
10th Percentile | $152 | $1,333,951 | $35,724 | 20x | 511 |
Minimum | $24 | $306,000 | $4,563 | 3x | 19 |
Year 1 Early Disclosures:
CEO Pay Ratio | Revenue
($mm) |
CEO Pay | Median Employee Pay | Pay Ratio | Number of Employees |
Summary Statistics (n=300) | |||||
Maximum | $213,395 | $113,572,988 | $580,335 | 5463x | 364,575 |
90th Percentile | $22,014 | $16,179,146 | $144,886 | 325x | 51,370 |
75th Percentile | $7,033 | $10,608,763 | $95,149 | 171x | 16,960 |
Median | $1,879 | $5,302,622 | $60,823 | 80x | 3,964 |
25th Percentile | $409 | $2,465,703 | $45,349 | 32x | 937 |
10th Percentile | $127 | $969,417 | $34,082 | 15x | 271 |
Minimum | $0 | $0 | $2,526 | 1x | 13 |
Location in Proxy Statement
Placement In Proxy |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Before CD&A | 1 | 0% |
Within CD&A | 10 | 5% |
Directly Before Compensation Tables | 7 | 3% |
Within Compensation Tables | 43 | 21% |
After Compensation Tables | 140 | 70% |
Year 1 Early Disclosures:
Placement In Proxy |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Before CD&A | 1 | 0% |
Within CD&A | 14 | 5% |
Just Prior To or Within Compensation Tables | 71 | 24% |
Following “Potential Payments Upon Termination” Section | 214 | 71% |
Supplemental Ratios
Supplemental Ratios |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Companies Disclosing a Supplemental Ratio | 19 | 9% |
Companies Not Disclosing a Supplemental Ratio | 182 | 91% |
Supplemental Ratios – How Many |
Prevalence |
Percentage |
Summary Statistics (n=19) | ||
Companies Disclosing One Supplemental Ratio | 18 | 95% |
Companies Disclosing More Than One Supplemental Ratio | 1 | 5% |
Year 1 Early Disclosures:
Supplemental Ratios |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Companies Disclosing a Supplemental Ratio | 32 | 11% |
Companies Not Disclosing a Supplemental Ratio | 268 | 89% |
Supplemental Ratios |
Prevalence |
Percentage |
Summary Statistics (n=32) | ||
Companies Disclosing One Supplemental Ratio | 27 | 84% |
Companies Disclosing More Than One Supplemental Ratio | 5 | 16% |
Supplemental Ratios – Rationale |
Prevalence |
Percentage |
Summary Statistics (n=19) | ||
Alternate CEO Compensation Calculation | 12 | 63% |
Alternate Employee Compensation Calculation | 2 | 11% |
Alternate CEO and Employee Compensation Calculation | 1 | 5% |
Alternate Employee Demographic | 2 | 11% |
Both Change Compensation Calculation and Employee Demographic | 0 | 0% |
Multiple Reasons | 2 | 11% |
Supplemental Ratios – Rationale |
Prevalence |
Summary Statistics | |
Alternate CEO Compensation Calculation | 13 |
Alternate Employee Compensation Calculation | 4 |
Alternate CEO and Employee Compensation Calculation | 2 |
Alternate Employee Demographic | 3 |
Both Change Compensation Calculation and Employee Demographic | 0 |
Year 1 Early Disclosures:
Supplemental Ratios – Rationale |
Prevalence |
Percentage |
Summary Statistics (n=32) | ||
Alternate CEO Compensation Calculation | 17 | 53% |
Alternate Employee Compensation Calculation | 1 | 3% |
Alternate CEO and Employee Compensation Calculation | 6 | 19% |
Alternate Employee Demographic | 4 | 13% |
Both Change Compensation Calculation and Employee Demographic | 4 | 13% |
Measurement Date / Month
Measurement Date |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Last Day of Q4 | 103 | 51% |
First Day of Q4 | 30 | 15% |
Other | 61 | 30% |
Not Disclosed | 7 | 3% |
Measurement Month |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
First Month of Quarter | 54 | 27% |
Second Month of Quarter | 17 | 8% |
Last Month of Quarter | 123 | 61% |
Not Disclosed | 7 | 3% |
Year 1 Early Disclosures:
|
|
Exemptions From Employee Population
Exemptions From Employee Population |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Disclosed Utilizing Exemptions | 75 | 37% |
No Disclosure About Utilizing Exemptions | 126 | 63% |
Year 1 Early Disclosures:
Exemptions From Employee Population |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Disclosed Utilizing Exemptions | 106 | 35% |
No Disclosure About Utilizing Exemptions | 194 | 65% |
Exemptions From Employee Population – Rationale |
Prevalence |
Percentage |
Summary Statistics (n=75) | ||
Geographic (De Minimis) | 36 | 48% |
Do Not Set Group of Employees Pay | 8 | 11% |
Merger / Acquisition(s) | 13 | 17% |
Employees on Leave of Absence | 3 | 4% |
Multiple Reasons | 15 | 20% |
Exemptions From Employee Population – Rationale |
Prevalence |
Percentage |
Summary Statistics (n=75) | ||
Geographic (De Minimis) | 48 | 64% |
Do Not Set Group of Employees Pay | 14 | 19% |
Merger / Acquisition(s) | 25 | 33% |
Employees on Leave of Absence | 4 | 5% |
Year 1 Early Disclosures:
Exemptions From Employee Population – Rationale |
Prevalence |
Percentage |
Summary Statistics (n=106) | ||
Geographic (De Minimis) | 56 | 53% |
Do Not Set Group of Employees Pay | 9 | 8% |
Merger / Acquisition(s) | 11 | 10% |
Multiple Reasons | 21 | 20% |
Other | 9 | 8% |
Description of Median Employee
Description of Median Employee |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Disclosure Includes A Description of Median Employee | 33 | 16% |
Disclosure Does Not Include A Description of Median Employee | 168 | 84% |
Type of Description |
Prevalence |
Percentage |
Summary Statistics (n=33) | ||
Geographic Location of Employment Only | 7 | 21% |
Employment Type (Full-time, part-time, etc.) Only | 0 | 0% |
Pay Type (Salary, hourly, etc.) Only | 0 | 0% |
Role Only | 4 | 12% |
Compensation Detail Only | 2 | 6% |
Multiple Descriptors | 20 | 61% |
Type of Description |
Prevalence |
Percentage |
Summary Statistics (n=33) | ||
Geographic Location of Employment | 25 | 76% |
Employment Type (Full-time, part-time, etc.) | 13 | 39% |
Pay Type (Salary, hourly, etc.) | 10 | 30% |
Role | 16 | 48% |
Compensation Detail | 8 | 24% |
Year 1 Early Disclosures:
Describes Median Employee |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Disclosure Includes A Description of Median Employee | 35 | 12% |
Disclosure Does Not Include A Description of Median Employee | 265 | 88% |
Adjustments to Employee Compensation
Cost of Living Adjustments |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Utilized COLA For Median Employee Pay | 1 | 0% |
Did Not Utilize COLA For Median Employee Pay | 52 | 26% |
Silent | 148 | 74% |
Annualized Employee Compensation |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Annualized Employee Compensation per CACM | 84 | 42% |
Did Not Annualize Employee Compensation per CACM | 30 | 15% |
Silent | 87 | 43% |
Year 1 Early Disclosures:
Cost of Living Adjustments |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Utilized COLA For Median Employee Pay | 3 | 1% |
Did Not Utilize COLA For Median Employee Pay | 95 | 32% |
Silent | 202 | 67% |
Annualized Employee Compensation |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Annualized Employee Compensation per CACM | 132 | 44% |
Did Not Annualize Employee Compensation per CACM | 40 | 13% |
Silent | 128 | 43% |
Comparability Disclaimer
Comparability Disclaimer |
Prevalence |
Percentage |
Summary Statistics (n=201) | ||
Disclosure Includes Disclaimer | 56 | 28% |
Disclosure Does Not Include Disclaimer | 145 | 72% |
Year 1 Early Disclosures:
Comparability Disclaimer |
Prevalence |
Percentage |
Summary Statistics (n=300) | ||
Disclosure Includes Disclaimer | 80 | 27% |
Disclosure Does Not Include Disclaimer | 220 | 73% |
CEO & Median Employee Compensation Includes Non-Discriminatory Benefits
Compensation Includes Non-Discriminatory Benefits? |
Prevalence |
Percentage |
Summary Statistics (n=176) | ||
Yes | 25 | 14% |
No | 151 | 86% |
Year 1 Subset of S&P 500:
Compensation Includes Non-Discriminatory Benefits? |
Prevalence |
Percentage |
Summary Statistics (n=353) | ||
Yes | 45 | 13% |
No | 308 | 87% |
Joshua Hovden and Stella Kovoros provided research assistance for this report.
Founding Partner Kelly Malafis discusses the current state of gender pay equity