In 2019, CEO pay did not increase for the first time during the last five years, according to the 2020 edition of the Equilar report CEO Pay Trends, which features independent commentary from Meridian Compensation Partners.
“If the current economic uncertainty and volatility remains at the beginning of 2021, companies may not feel that they can realistically set multi-year financial goals”
While median CEO pay did not increase in 2019, across the Equilar 500—the 500 largest U.S. public companies by revenue—median CEO pay increased by nearly 22% since 2015. In 2019, median pay for Equilar 500 chief executives remained consistent at $12.3 million. While CEO compensation decreased in the majority of sectors, pay increased from 2018 to 2019 across the consumer defensive, healthcare, industrial and utilities sectors. Healthcare saw the largest increase at 11.3%.
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Of course, the COVID-19 pandemic has added another layer of complexity to the executive compensation landscape. According to the report, 91 Equilar 500 companies have reduced CEO salaries in response to COVID-19. Companies across corporate America will seek to adapt their CEO pay plan design, particularly long-term incentive plans, as they navigate through the pandemic in the coming months.
“If the current economic uncertainty and volatility remains at the beginning of 2021, companies may not feel that they can realistically set multi-year financial goals,” said Dan Kaufman, Lead Consultant at Meridian Compensation Partners. “As a result, we may see a reduction in the percentage of performance shares granted to CEOs in order to balance the risk of uncertainty within the program.”
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