REDWOOD CITY, CA (July 12, 2019)—Over the last five years, CEO pay packages have steadily increased. 2018 was no different, according to the 2019 edition of the Equilar report CEO Pay Trends, featuring independent commentary from Meridian Compensation Partners.
CEO pay for Equilar 500 companies—a sample of the largest public companies as measured by revenue—has increased by nearly 25% over the last five years. In 2018, median pay for Equilar 500 chief executives surpassed $12 million. Median compensation rose across sectors with the exception of the consumer goods sector, which saw a 0.9% decrease in pay
“CEO pay is trending upward at an increasing rate across almost all sectors,” said Erin Lehr, Lead Author of the report. “At the same time, boards continue to shift their focus away from cash compensation and time-based equity towards performance-based awards, although this shift has slowed in the last year.”
Of course, there are several factors that have contributed to the steady climb in CEO pay. “The U.S. economy continues to expand at a steady pace which is fueling the global economy and boosting market valuations,” said Christopher Power, Senior Consultant at Meridian Compensation Partners. “During this period of growth, most organizations have managed the growth profitably, resulting in continued above target annual and long-term incentive payouts. Additionally, stock compensation continued to stand out as the largest element of CEO pay mix. Stock-based compensation increased 10.2% in value from 2017, and accounted for more than half of total median pay at 51.2%."
Other key findings from the report include:
The healthcare sector had the highest median pay for the fifth year in a row, at $16.3 million. Conversely, median CEO pay was the lowest in the utilities sector, at $9.7 million.
Since 2014, the percentage of Equilar 500 CEOs receiving performance-based awards has been steadily rising, exceeding both time-based stock and options grants as the most prevalent long-term incentive vehicle. In 2018, 87.8% of Equilar 500 CEOs received performance-based awards.
The rate of growth for performance-based grants has slowed in the last two years. From 2014 to 2016, performance-based grants increased by 16.8%, but only experienced 2.6% growth from 2016 to 2018.
Request a copy of the full report by filling out the form or by contacting Equilar directly.
For further discussion and details on this topic, please join Equilar, Meridian Compensation Partners and CalPERS for a webinar on July 16. Registration is now open—visit www.equilar.com/webinars to learn more about this and other events.
About the Report
CEO Pay Trends, an Equilar publication, analyzes the compensation data of chief executive officers at Equilar 500 companies over the last five fiscal years. Fiscal year one is defined by companies that filed their most recent proxy statement (DEF 14A or DEFC 14A) or compensation information in a 10-K amendment (10-K/A) between May 1, 2018 to April 30, 2019. Additionally, CEOs that did not serve in the position for a full fiscal year were excluded from the analysis.
Equilar is the leading provider of Board Intelligence Solutions. Companies of all sizes rely on Equilar for their most important boardroom decisions, including 70% of the Fortune 500 and institutional investors representing over $13 trillion in assets. Equilar offers data-driven solutions for board recruiting, executive compensation and shareholder engagement that bring together business leaders, institutional investors and advisors to drive exceptional results while ensuring sound corporate governance. The Equilar suite of solutions includes industry-leading board education symposiums, comprehensive custom research services and award-winning thought leadership. Founded in 2000, Equilar is cited regularly by Associated Press, Bloomberg, CNBC, The New York Times, The Wall Street Journal and other leading media outlets. Visit www.equilar.com to learn more.
About Meridian Compensation Partners
Meridian Compensation Partners, LLC provides executive compensation consulting and corporate governance services to over 500 public and private corporations. With nine offices and 60 associates in the U.S. and Canada, our services include board level advisory services, compensation program design, and market intelligence on executive pay and governance matters. www.meridiancp.com.
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