September 9, 2020
CEO Pay: Annual Bonuses Down, Even Before Pandemic
According to this analysis just released by Willis Towers Watson, median CEO pay in the S&P 1500 was up “only” 5.5% for 2019 performance – the smallest rate of increase since 2016 – due to lower annual bonuses. A 13.1% increase in the S&P 500 positively influenced the average – things were more bleak at small- & mid-cap companies. And this was all based on performance before the pandemic! This announcement summarizes the findings. Here are some high points:
– Total earned pay for S&P 1500 CEOs increased 5.5% at the median in 2019, a sharp drop from a 13.7% jump in the previous year
– While S&P 500 CEOs saw a 13.1% increase at the median, total pay for S&P 600 and S&P 400 CEOs grew just 4.8% and 0.2%, respectively
– There was a -3.2% decrease in annual bonus payouts compared with a 5.8% increase in the previous cycle – the average annual bonus payout dropped from 114% of target in 2018 to just 102% for 2019, the lowest mark since the Great Recession
– Earned long-term incentives, the largest component of executive pay at major companies, increased 8.4% in 2019, down sharply from an increase of 13.1% in 2018
– CEO salaries, which have held steady the past few years, increased a modest 2.5% at the median in 2019 – in 2020, nearly one-fifth of companies have reduced CEO salaries in response to the pandemic
– Liz Dunshee