The Advisors' Blog

According to this analysis from ISS Corporate Solutions, total compensation rose by 23% for S&P 500 CEOs over the past 5 years – compared to only 1% for CEOs of FTSE 100 companies. Here’s more detail:

– Median S&P 500 CEO salary grew 15% vs. 10% for the FTSE 100

– Annual bonuses increased 22% among S&P 500 CEOs vs. 21% for FTSE 100 CEOs

– The most striking difference was long-term Incentive (LTI) pay, which grew 34% for the S&P 500 CEOs, while dropping by 3% at FTSE 100 companies.

The article goes on to note that LTIs constituted 71.4% of S&P 500 CEO pay in 2022 (based on granted pay value). If they’re working as intended, those incentives seem to have paid off not just for US CEOs, but also for shareholders of the US-listed companies:

While many factors may contribute to the growing pay disparity, S&P 500 companies have outperformed their FTSE 100 counterparts both in terms of market cap (value creation) and revenue growth. Median market cap and revenue among S&P 500 companies witnessed 52% and 40% growth, respectively, while among their FTSE 100 brethren, market-cap levels remained flat despite a 20% rise in revenue.

I blogged about this pay mix – and payoff – back in 2019. Since then, the appetite for high-risk, high-payout awards has only grown. Several companies have granted “moonshot” awards to take pay to new heights. LTIs haven’t caught on to the same extent in the UK. America: Go big or go home!

– Liz Dunshee