July 6, 2023
Pay Vs. Performance: S&P 500 Disclosures
FW Cook recently released its analysis of the pay vs. performance disclosures filed by the 403 S&P 500 companies that filed proxy statements containing that disclosure through June 1, 2023. Here are some of the highlights:
– The top three most common financial performance measures that companies chose as their Company Selected Measure (CSM) were profit (56%), revenue (17%), and returns (12%)
– A majority of companies included profit (88%), TSR (55%), and revenue (51%) in their Tabular List and only 21% of companies included non-financial performance measures
– Most companies (76%) used their 10-K published industry or line-of-business index as their total shareholder return (TSR) peer group
– Despite three financial performance measures being the minimum requirement, most companies included additional financial performance measures
– Most companies (91%) used graphs/charts as the clear description requirement, and the remaining 9% used a narrative only description
The report also notes that, as expected, the vast majority of companies included their PVP disclosure near the end of the proxy statement, usually following the pay ratio disclosure. Only four companies chose to include the disclosure before the Summary Compensation Table.
– John Jenkins