WTW evaluated S&P 500 proxy statement disclosures related to CEO security spend in 2025, comparing data to prior years. Not surprisingly, the report cites increased prevalence, but a decrease in median value. The “relatively low costs” of these programs cited below may largely be due to the time of year they were implemented, so this data may change significantly once 2025 spending is reported.
The median value of security services for CEOs in 2024 was approximately $80,000, down from approximately $94,000 in 2023. The rise in prevalence but drop in median value in 2024 likely were related, as there was an influx of newly established programs with relatively low costs by end of year. Among 25 companies that reported they had established security services for the CEO in the past year and disclosed an associated value; the median was just $54,630.
Spend varied greatly depending on company size and CEO profile.
Unsurprisingly, corporations with the largest revenue were most likely to report security benefits. Nearly two-thirds (64%) of S&P 500 companies with revenue of more than $30 billion provided their CEO with security services (up from 53% in 2023). Conversely, just 16% of companies with less than $6 billion in revenue did the same, up from only 9% in the prior year.
Also, sectors with a concentration of high-profile CEOs are more likely to provide security services. Sixty percent of S&P 500 communication-sector CEOs received security services — the largest percentage of the group. Healthcare saw the biggest jump in the number of CEOs in our study receiving enhanced protection in 2024, with 40% receiving services (up from 25% in 2023). Similarly, the IT sector grew from 30% to 42%, with both the communication and IT sectors reporting median values of more than $100,000 in 2024.
Types of security services included:
– Physical or general protection – Transportation-related services (e.g., car and driver) – Home and residential security (installation and maintenance of equipment & monitoring services) – Cybersecurity or identity theft protection – Personal use of corporate aircraft (reported separately, but often required or encouraged due to secuity concerns)
I blogged last year that it was way too early to write off performance awards, despite gripes from some that they’re overly complex and can result in outsized and/or misaligned payouts.
ISS is asking about the topic again in this year’s benchmark policy survey – specifically, whether respondents’ organizations consider time-based equity acceptable for all or part of executive long-term incentive awards. To me, that wording doesn’t seem to presume a tidal wave of time-based awards, but at any rate, since tomorrow is the response deadline, we’ll likely get to see within a month or two whether investors are open to not penalizing companies who use time-based awards.
In the meantime, Pay Governance worked with IR Impact to survey 100+ institutional investors and public pension funds about their views on performance stock units – and this memo reveals what they found. Here are a few takeaways:
– 49% all investors indicated they were satisfied / very satisfied with the CEO pay alignment at their portfolio companies.
– 26% were dissatisfied or very dissatisfied.
– As shown in Exhibit 2, the results of our survey largely support the preference for PSUs in contrast to time-based stock awards (RSUs) with longer vesting schedules than typical: 71% preferred PSUs that would be earned/vested over a multi-year period or PSUs in concert with a balance of time-based RSUs.
– 51% would rather have issuers award mostly or 100% PSUs, while 86% desire that PSUs comprise at least 50% of total LTI value.
– Importantly, from most executives’ point of view, the upside payout of the number of PSUs (150-200% of target) is extremely compelling and motivational relative to RSUs that do not have that type of upside.
– Investor opinions are split on whether standard stock options with time-vesting are considered performance-based (52%) or time-based (48%).
Pay Governance urges companies not to rush into changing their plan design based on anecdotal criticisms of performance-based awards, as investors seem to remain pretty supportive of how PSUs are being used. Pay Governance predicts that most companies will continue with their overall approach to performance-based pay.
Meredith recently shared stats from BlackRock’s 2024 Investment Stewardship Report over on our Proxy Season Blog on TheCorporateCounsel.net. BlackRock published the 104-page report – and this 25-page summary – earlier this year. Here are a few takeaways on the asset manager’s compensation-related engagements and voting decisions:
– BIS may engage with companies where additional clarity would be helpful to understand how their compensation policies reward executives for accomplishments in the short-term and incentivize the delivery of long-term financial performance. In 2024, BIS held 1,272 engagements with 1,083 companies on incentives aligned with financial value creation.
– When analyzing a company’s disclosures, BIS seeks to determine whether the board’s approach to executive compensation is rigorous and reasonable, in light of the company’s stated long-term corporate strategy and specific circumstances, as well as local market and policy developments.
– Globally, BIS did not support the election of 1,109 directors at 648 companies due to executive compensation concerns in 2024. BIS may vote against members of the compensation committee or other directors if it perceives misalignment between pay and performance.
– Globally, BIS supported ~82% – or 15,858 out of 19,232 – of compensation-related management proposals put to a shareholder vote in 2024. Compensation-related proposals include Say on Pay proposals, remuneration policy proposals, proposals to approve new or revised incentive plans, and other compensation-related proposals. BIS supported ~82% of management proposals to approve Say on Pay and related grant approval proposals put to a shareholder vote in 2024
– Support was largely driven by many companies’ enhanced disclosures and a clearer articulation of how their policies align with shareholders’ long term financial interests. In general, companies improved their explanations of how short-and long-term incentive plans complement one another and are effective in rewarding executives who deliver long-term financial value.
– While BIS supported a greater proportion of Say on Pay proposals in 2024 compared to 2023, it continued to vote against programs that included large outside-of-program awards that lacked a compelling rationale, lacked sufficient linkages between compensation and financial returns to shareholders, or did not clearly connect compensation program design and corporate strategy. BIS noted that fewer companies made one-time adjustments to their pay programs in 2024.
The report includes case studies beginning on page 69 and also directs companies to this January 2025 bulletin on BlackRock’s approach to engagement on executive compensation.
Keep in mind that the lag time with these reports means that we don’t know the investors’ prior-year voting rationales or engagement case studies until after proxy season has passed – but they can still be helpful heading into this year’s off-season engagements. And we’ll soon also have the hard data on votes, which will give further insight into this year’s decisions.
It’s been almost 2 months since the SEC held its roundtable on executive compensation disclosure rules. I had highlighted a few comment letters in advance of the event – but of course, many more have arrived since then. The grand total as of yesterday was 1,105!
Out of those, there are about 60 unique letters in the mailbag. Similar to remarks at the roundtable, many of them acknowledge that executive compensation disclosures have become unwieldly. The letters vary in proposed solutions, though. Here are a few high-level themes that companies will like:
What about the other 1,000+ letters? Well, for the Staff tasked with reading everything, it may be good news that they’re substantially identical. Here’s more detail:
– 1,025 people have submitted this brief letter – which advocates for expanded disclosure rules, and expressly supports CEO pay ratio disclosures and clawback requirements.
– This letter submitted by 19 retail investors focuses more on perks – but also calls out pay ratio disclosure as material information.
For both, the pay ratio piece is somewhat surprising since that disclosure seems to have settled into predictable industry-based bands. Glass Lewis asked institutional investors in this year’s policy survey whether they care about this topic, so it will be interesting to see those results!
On the institutional investor front, this letter from the Council of Institutional Investors supports comprehensive disclosure, and – as you might expect – closing “non-GAAP loopholes” for compensation disclosures.
We will undoubtedly be discussing the future of executive compensation disclosure at our October “Proxy Disclosure & 22nd Annual Executive Compensation Conferences.” With several of our speakers also participating in the SEC’s roundtable and various comment letter endeavors, we will be ready to share the very latest updates – as well as practical tips for the 2026 proxy season. Join us in Las Vegas on October 21st & 22nd – right before NASPP’s annual conference in the same location – or virtually, if you can’t attend in person, so you don’t miss any of our practical agenda. Sign up online or reach out to our team at info@ccrcorp.com or 1.800.737.1271.
Over half of S&P 500 companies use relative total shareholder return in their long-term incentive plans – but this Compensation Advisory Partners memo points out that rTSR’s simplicity can be deceptive, so the way your company is using this metric could require a second look. Here’s an excerpt:
The first decision is whether to use rTSR as a primary weighted metric or as a modifier to other financial results.
Most companies give rTSR a prominent role, with 68% using it as a weighted metric, meaning it directly determines a portion of the PSU payout. While 50% is the most common weighting (38% of companies), practices diverge sharply on either side. About one-third lean heavily on rTSR, with 22% weighting it at the full 100%. At the other end, 29% set it below 50% — and only a small minority, 13%, drop below 33%, most often at 25%.
When rTSR is a weighted metric, nearly nine in ten companies measure performance as a percentile rank within their comparator group. The median payout scale begins at the 25th percentile for threshold, reaches the 50th percentile for target, and tops out at the 80th percentile for maximum payout. While the traditional 25th / 50th / 75th percentile performance goal scale remains the single most common approach (31%), it is no longer majority practice, as more rigorous maximum goals have become increasingly common.
The memo goes on to describe other variations of using rTSR as a weighted metric, and how this differs from a modifier approach – which is used by 32% of applicable S&P 500 companies. The memo says that weighted metrics make rTSR a central driver of payouts – whereas a modifier reinforces financial or strategic goals – so companies should think about their overall compensation philosophy when choosing an approach.
The memo also discusses the next major decision point for rTSR metrics – the comparator group. Here’s an excerpt about that:
The trade-off is clear: indices are transparent and objective but may be less relevant for companies in niche sectors, while custom peer groups can provide a sharper performance comparison and the ability to control the sample size but require more judgment and justification in their selection.
CAP cautions companies using sector indexes to carefully consider the constituents included, as they may be reclassified over time.
These issues with rTSR aren’t new – Meredith blogged about potential improvements to tech industry incentive plans a few months ago, and I swiped today’s headline from a blog that Broc wrote back in 2018! But if it’s been a while since your compensation committee considered how rTSR is used, it may be time to revisit the discussion. Members can visit our “Determining How Much Pay is Appropriate” Practice Area for more resources on design issues and trends.
This HLS Blog post from DragonGC summarizes the results of their recent analysis of engagements conducted and disclosed by 24 Fortune 1000 companies that had sub-optimal say-on-pay outcomes in 2024. They found that engagement centered on:
Changes in practices
– Changes in board oversight
– Change in peer group
– Changes to performance metrics
– Eliminate use of one-time awards
Refining targets
– Stretch targets
– Longer measurement period
– Use TSR modifier
– Caps on CEO
– Caps on perquisites
Say-on-pay improvements in 2025 following these engagement disclosures ranged widely — from 5% to 67%. The blog lists specific companies that addressed these issues and links to the relevant disclosure in their proxy statements, if you’re looking for samples.
As I noted in late July, Glass Lewis is now out with its annual policy survey. Responses are due September 15 by 8 pm ET. This Weil alert details key topics covered in the survey. Here are the compensation-related matters:
Time-Based Awards. Citing the preference of over 85% of respondents to last year’s survey for performance-based incentive awards with an openness to time-based awards under certain circumstances, and noting ongoing debate regarding a company’s mix of time- and performance- based awards (as discussed at the SEC Roundtable on Executive Compensation on June 26, 2025, see our prior Alert here), Glass Lewis asks respondents under what specific circumstances they would consider use of only time-based awards under a long-term incentive plan to be reasonable.
Director Pay. Glass Lewis notes that, in developed markets, set fees generally account for the majority of non-executive director compensation and that such fees are generally modestly increased over time without controversy or intense scrutiny. Noting the understanding that substantial increases in non-executive director pay occur infrequently, Glass Lewis asks how respondents assess such significant increases in director fees.
Executive Security and Perks. Understanding company concerns that the current SEC guidance on perquisites may be confusing and may dissuade companies from providing security protections, Glass Lewis asks whether, and under what circumstances, respondents believe executive security costs should be treated as perquisites.
Make-Whole Incentive Grants. Noting the increase in the number of “make-whole” grants disclosed in connection with executive hires in 2025 and the disparate responses to last year’s survey question on the topic, Glass Lewis asks respondents to provide greater detail on their evaluation of make-whole awards, as opposed to other signon awards, including whether they should be assessed on the same criteria as other awards.
Equity Plans. Glass Lewis notes that when shareholders do not approve a company’s equity plan, it can significantly impact a company’s ability to pay its employees. With such high stakes in mind, Glass Lewis requests that respondents provide greater detail on what characteristics they consider important in evaluating omnibus equity plans, including qualitative terms and best practices, absolute or relative burn rate, or overhang and dilution levels, dilutive impact of the share request, size of the share request compared to past usage and current need, and historical and projected cost of the plan.
SEC Rulemaking. Noting that the SEC may scale back executive compensation disclosure, Glass Lewis asks what disclosure elements respondents consider to be crucial in communicating and assessing executive compensation programs. Specifically, Glass Lewis asks respondents to indicate whether the following are “very important,” “important,” or “not important”: incentive plan design; rationale for potentially concerning pay practices; reconciliation between GAAP and non-GAAP metrics used in incentive plans; standard compensation tables; SEC-mandated pay-versus-performance disclosure; and CEO to median employee pay ratio.
Tariffs. Glass Lewis asks how respondents would typically expect the board to respond when executive incentive outcomes reflect elements of a company’s performance that have been materially impacted by tariffs.
Severance Benefits. Glass Lewis notes that companies may often make ad-hoc adjustments to employment and award agreements to expand severance benefits. As such, Glass Lewis asks which ad-hoc adjustments respondents believe are acceptable.
Like the ISS survey, it also cites the SEC’s February Schedule 13G eligibility guidance. Glass Lewis asks survey respondents whether they are considering voting or engagement policy changes in response.
Yesterday, I shared this Semler Brossy alert that recommends acting now to develop a discretionary scorecard — i.e., a “reference point all parties can refer to when evaluating how well management is keeping the business moving forward” — to “serve as a basis for whether discretion might be warranted” when approving payouts under 2025 short-term incentive programs. It says time is of the essence. To get you started, it includes some suggestions — and even provides some examples.
In our work navigating the challenges posed by tariffs and related executive actions, we have come across several “buckets” of metrics that boards can mix and match according to their unique challenges and goals:
Adapt – Respond to disruption and reposition the business: Speed and impact of tariff mitigation; Pricing strategy shifts; New sourcing, manufacturing, or distribution pathways; Maintaining supply chain continuity; Cost containment without damaging future growth or quality; Workforce agility (redeployments, upskilling); Liquidity; Retention of key talent and customers; Brand and reputation protection
Grow – Position for long-term value creation: New product/service launches; Share gains in key markets; Key customer wins; Growth in recurring/high-margin revenue; Digital acceleration; Expansion into new channels, geographies, or customer segments; Strategic initiative advancement (e.g., tech investment, operational improvements)
The memo says that committees will probably pull metrics from several of the buckets (without assigning a weight to any of them) and that progress against the scorecard should be a standing agenda item for the remainder of the year. Then, when considering the size and scope of adjustments, committees must consider these key questions:
– Who should participate in any discretionary adjustments? Boards will need to decide whether all executives participate or whether the most senior executives, with the greatest need for alignment with shareholders, warrant consideration. Most often, boards will treat executives as a team, but sometimes individual contributors with an outsized impact could be recognized. Candidates for discretion should have a meaningful effect on the facets of the business directly affected by or that are vital to overcoming present challenges.
– What are the most important criteria by which to apply discretion? . . . It is best to selectively choose a few key metrics instead of the entire gamut, focusing on areas where executive decisions can make a tangible impact on long-term growth trajectories.
– What level of discretion is appropriate? Discretionary changes, in almost all cases, should aim to bring payouts to threshold, or somewhere between threshold and target. In most cases, relative outperformance would have to be exceptionally high to warrant moving payouts above target.
Check out the alert for example scorecards for healthcare, manufacturing and consumer products companies.
Our October “Proxy Disclosure & 22nd Annual Executive Compensation Conferences” are well-timed to share the latest and greatest thinking on 2025 incentive programs, and we have a panel — featuring Brandon Gantus of Wilson Sonsini, Ali Nardali of K&L Gates and Tara Tays of Pay Governance — devoted to discussing today’s key issues for short-term incentives. Join us in Las Vegas on October 21st & 22nd – right before NASPP’s annual conference in the same location – or virtually, if you can’t attend in person, so you don’t miss any of our great content. Sign up online or reach out to our team at info@ccrcorp.com or 1.800.737.1271.
It continues to look likely that many compensation committees are going to have to grapple with what to do if annual incentives don’t meet thresholds this year. Sometimes that result is appropriate and warranted, but other times it doesn’t sit well with compensation committees that may feel that management — all things considered — navigated a challenging environment comparatively well. Plan language may give the committee the option of making discretionary adjustments, but this approach can make investors uneasy and result in say-on-pay and even director support issues. This Semler Brossy alert says there are broadly two situations where discretion may be appropriate to adjust outcomes in management’s favor:
When management makes a qualitative, but objectively measured, improvement to the company’s long-term outlook. This may include launching a new product earlier than planned, reconfiguring a product’s design, sourcing, or distribution to be more cost-effective, achieving a key customer win, or improving product quality or service offerings.
When the company outperforms its peers. Improvements in relative market share, brand reputation, margin growth, etc., are still useful benchmarks, as everyone is “going through this together.” Outperforming the field still indicates outsized performance.
Together with these circumstances, discretionary adjustments are better received when they reward good future positioning (versus solely addressing short-term problems), are reciprocal (adjustments in response to an external factor are both upward and downward), and they’re appropriately sized (aka, get executives closer to threshold, not over target).
The alert encourages compensation committees to consider developing a discretionary scorecard, “a non-binding, unweighted set of strategic metrics that the board deems indicative of success during turbulent times,” which “allows boards to approach the topic of discretionary adjustments with flexibility and confidence” and offers these three advantages:
1. They offer hope. An incentive program that won’t pay out, through no fault of the employees, can be demoralizing.
2. They give people direction. A well-designed scorecard says, “We know we can’t control the tariffs, but here is a list of variables we can control.”
3. They provide rationale in advance. Shareholders are justifiably skeptical of claims that the board “can evaluate performance at the end.” Establishing the parameters of success in advance will bolster the company’s case with shareholders if/when adjustments are disclosed in the proxy.
I have always focused on number 3, but of course, 1 and 2 are potentially even more important! And here’s the key to really getting the benefit there: time is of the essence!
The sooner this scorecard is developed, the more effective it will be. Since yearly goals have already been set, a discretionary scorecard will run in parallel with the current incentive plan, and crucially, it comes with no weightings among measures or a promise of payment. Because it is non-binding, the scorecard gives the board time and flexibility to determine any adjustments later in the year. If the board feels like relief is warranted based on discretionary factors, they already have a strong, quantifiable foundation from which to base their decision.
Semler Brossy has some tips for developing these scorecards as well! (More on that to come!)
According to this NASPP blog – and the 2024 Equity Incentives Design Survey that NASPP cosponsored with Deloitte Tax – over 90% of public companies now offer performance-based equity awards.
That state isn’t shocking, but NASPP and Deloitte have been doing this survey a long time – and the trend line for these types of awards is striking. 25 years ago – before “say on pay” had entered our lives – only 29% of public companies used performance equity. Crazy! Today, the prevalence does vary by industry, with tech and life sciences lagging.
The blog looks at 6 trends in these types of awards. Here’s an excerpt:
Trend #5: Vesting is typically conditioned on two or more metrics
A full 76% of companies use two or more metrics to measure performance. Most (41%) use two metrics, while 26% use three and 10% use four or more.
Across all industries, TSR is the most popular metric, and EPS is the third most popular. For tech and life sciences companies, revenue ranks second, but it drops to fourth among other sectors, where ROIC/RONA take the second spot.
Trend #6: Three years is the standard performance period
An overwhelming majority—83%—of companies use a three-year performance period for their awards. We see little variation across industries, though the few companies that use a different period are more likely to be in the tech and life sciences sectors.
About half of companies that measure performance over less than three years impose additional service conditions (i.e., a “service tail”) that extend beyond the performance period, typically by two years or less. Only 13% of companies with a three-year performance period impose a service tail.
At our upcoming “Proxy Disclosure & 22nd Annual Executive Compensation Conferences,” we’ll be discussing key issues in structure & disclosure for short-term and long-term incentives. The Conferences are happening in Las Vegas on October 21st & 22nd – right before the big NASPP Conference in the same location – and it’s not too late to register! You can do that by signing up online or by reaching out to our team at info@ccrcorp.com or 1.800.737.1271. Here’s the full agenda – full of practical insights to help you as you head into year-end and the 2026 proxy season.