January 7, 2025
The Pay & Proxy Podcast: “Considering CEO Equity in Pre-retirement Years”
As we kick off a new year, many people are reflecting on their goals and plans for the future. For your CEO, that may include retirement planning. And these days, that transition may come sooner than you expect!
According to a WTW memo that Meredith recently shared, CEOs have been retiring at younger ages in recent years. In addition to the obvious succession planning issues that this creates, there are also a few things that compensation committees can consider in order to optimize equity awards during an executive’s last few working years.
In the latest 10-minute episode of The Pay & Proxy Podcast, Meredith was joined by WTW’s Mike Oclaray and Kate King to discuss this topic. Tune in to hear:
– Statistics from five years of pay history for recently retired S&P 500 CEOs
– Why compensation committees should reconsider LTI strategy as CEOs near retirement
– Assessing existing equity awards to understand treatment on retirement and the value of in-flight awards that may be prorated or truncated
– Potential alternatives to consider in light of an impending retirement, including a larger grant, a change to pay mix or vesting or a special performance award
– A real-world example of improving CEO equity awards to sync with remaining tenure and align the CEO’s interests with those of the organization and shareholders
Check out this LinkedIn post from Aon’s Laura Wanlass for other things to consider around executive transitions. Thinking ahead about contracts and disclosures can help you avoid negative votes at your annual meeting.
– Liz Dunshee