As of April 8, 2016:
As of April 8, 2016:
In a first look at CEO pay levels in 2015, target CEO total compensation among 100 early proxy filers grew +7% in 2015 to a median $6.5 million. When actual annual bonus and long-term cash payouts are substituted for the target amounts, compensation growth is reduced to +3%. The difference between target and actual was driven by a year-over-year decrease in annual bonus payouts as a percent of target. The findings are based on our recent study of 100 companies with revenues greater than $1 billion filing proxies since January 1, 2016.
Annual Bonus
Actual bonus payments were down -3% in 2015 compared to 2014, but were still above target amounts. In 2015, the median bonus payout equaled 105% of target, a decrease from 2014, when bonuses for the same group of CEOs equaled 118% of target. While bonus payouts as a percent of target decreased in 2015, profits increased +7%, which leads us to hypothesize that more rigorous goal setting in 2015 versus 2014 is the main reason for the decrease.
Paying for Performance
Bonuses provide the clearest link between pay and performance on an annual basis. Among the 100 early filers, 58 companies increased profits in 2015, while profits decreased at the remaining 42 companies. Generally, annual bonuses are based on a variety of different financial criteria, but earnings are by far the most prevalent and heavily weighted metric for corporate CEO bonus plans. Among the early filers, companies with increased net income in 2015 paid bonuses equal to 112% of target, while companies with lower year-over-year net income paid bonuses equal to 99% of target.
Median Annual Bonus by Industry
Among the industries represented by five or more companies:
Total Compensation
Among the CEOs of the first 100 early filers, base salaries are up +3%, actual bonus payouts decreased -3% while target bonuses were up +4% and long-term incentive awards (equity awards and long-term cash incentives), on both an target and actual basis, increased +5%.
|
1-Year CEO Total Compensation Growth (%) 2015 Median ($) |
||||
| Base Salary | Annual Bonus | Long-Term Incentives | Total Compensation | |
| Target | +3%
$982,000 |
+4%
$1.2 million |
+5%
$4.1 million |
+7%
$6.5 million |
| Actual | -3%
$1.4 million |
+5%
$4.3 million |
+3%
$6.8 million |
|
Note: Medians are not additive
Total Compensation by Industry
Among the industries represented by five or more companies:
Target Pay Mix
The majority of CEO compensation continues to be delivered via long-term incentive awards such as stock options, restricted stock and performance shares. In 2015, long-term incentive awards represented 61% of CEO compensation. Annual bonuses rank second, comprising 22% of CEO compensation. Base salaries, represented as fixed compensation in the chart on the right, accounted for the remaining 17% of CEO total compensation. CEO pay mix has stayed fairly consistent over the last several years.
Target Pay Mix by Industry
Among the industries represented by more than five companies:
Early Filer Companies
The 100 companies included in the study represent nine different industries, with Industrials (26) and Information Technology (21) companies being the most represented. Fiscal 2015 revenues for the group ranged from $1.1 billion to $233.7 billion with a median value of $3.1 billion. Fiscal year ends range from July 31 to December 31, with September 30 being the most common (48).
About the Study
The study analyzed compensation data for the most recent two years as disclosed in 100 proxy statements filed in 2016 for companies with revenues greater than $1 billion and CEOs with a minimum tenure of two years. For additional details regarding the study please contact Steven Hall Jr. at 212-488-5400 or [email protected].
About Steven Hall & Partners
Steven Hall & Partners is an independent executive compensation consulting firm serving as outside counsel to boards, compensation committees and management. The firm focuses solely on executive compensation, director remuneration and related corporate governance matters.
June 16, 2016
New York, NY & Webcast
SH&P Speaker: Steven Hall
Explore the biggest issues in executive and director compensation with a diverse panel of past and current government regulators, business representatives, and technical experts at this advanced program.
Topics for 2016 include:
The course is designed for in-house and outside legal counsel, executive compensation advisors, human resource professionals, experienced practitioners seeking to keep current with the rapid changes in executive compensation, and practitioners with some experience seeking an understanding of the key concepts in executive compensation practice.
June 6-8, 2016
San Diego, CA
SH&P Speakers: Nora McCord, Sandra Pace & Michael Sherry
Annual Executive Incentives: The Onus of Paying a Bonus
As organizations consider how best to use resources, pay-for-performance is an appealing mantra. Incentive compensation remains a powerful tool to motivate, manage and retain key employees within a public, private or nonprofit entity. However, as both the competitive and economic environments continue to shift, we have seen some organizations struggle to maintain effective incentive compensation programs, particularly among public and nonprofit entities. The importance of an effective program is only heightened by the increased public scrutiny on executive compensation and the link between pay and performance. This panel discussion will cover emerging and best-practice short-term incentive plan considerations to address potential pitfalls.
Sandra Pace, Managing Director, Steven Hall & Partners
Michael Sherry, Consultant, Steven Hall & Partners
Best Practices for Compensation Committee Interactions: Can’t We All Just Get Along?
Drawing on the collective experiences of the panelists in serving the compensation committee as both advisors and members of management, this discussion will provide candid, practical and actionable advice on how HR professionals can best support the compensation committee. Hear compensation committee best practices and how management can help implement them, practical steps HR professionals can take to ensure a productive compensation committee meeting, how to effectively onboard new directors, and how to initiate and manage productive relationships with key stakeholders, including other members of senior management, the compensation committee chair, other members of the board, and the compensation committee’s advisors.