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    Despite Economic Headwinds, Seven in Ten U.S. CEOs Achieved Target or Above-Target Payouts

    ROCKVILLE, Md. (September 21, 2023) – ISS Corporate Solutions, Inc. (ICS), a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, today announced the results of an analysis of annual incentive awards given to CEOs at S&P 1500 companies between 2018 and 2022, finding that more than 70 percent of CEOs achieved target or above-target payouts in fiscal 2022. Over the five-year period studied, the percentage of CEOs achieving payouts at or above target also remained relatively unchanged despite significant variability in economic conditions, and payout rates were consistently above the 50-60 percent range that is considered best practice by consultants, academics, and practitioners. The findings call into question whether boards and compensation committees are setting sufficiently rigorous targets for their CEOs.

    Other findings from the analysis include:

    • Fifty-four percent of companies achieved payout levels at or above target in two consecutive years during the study period.
    • Company size significantly impacted the value of payouts, with S&P 500 companies reporting a median of $2.3 million in incentive payouts last year, compared with $925,000 for those in the S&P 600. Despite the difference in absolute dollars, however, each S&P 1500 market cap grouping has exhibited similar payout growth, with median payouts growing 19 percent since 2018.
    • Over 90 percent of S&P 1500 companies CEOs with an annual incentive award were issued a payout of at least threshold – the minimum payout that can be achieved – during the study period, save for 2020 during the pandemic.
    • A near 30-point spread in payouts exists between the industry segments with the highest and lowest payouts. In 2022, only 57 percent of CEOs in the Automobiles & Components industry achieved at or above target payouts, while 85 percent of chief executives in the Financial Services industry achieved that feat.

     

    “The trend of CEOs receiving at or above target payouts, while consistent with results in recent years, may raise concern with investors in the context of ongoing recession fears and a challenging operating environment for many companies,” said Roy Saliba, Managing Director at ISS Corporate Solutions.

    “When payout rates consistently stray beyond the range of what is considered best-practice, it often indicates an underlying issue with the design of the performance plan, whether with the metric selection, the formulation of the payout curve, or goals that are either too easy or too hard to achieve.”

    Read the full ICS analysis here.

    Companies turn to ISS Corporate Solutions, Inc. (“ISS-Corporate”) for expertise in designing and managing governance, compensation, sustainability, and cyber risk programs that align with company goals, reduce risk, and manage the needs of a diverse shareholder base by delivering data, tools, and advisory services. ISS-Corporate’s global client base extends across North America, Europe, and Asia, as well as other established and emerging markets worldwide. ISS-Corporate is a wholly owned subsidiary of Institutional Shareholder Services Inc. (“ISS”). ISS-Corporate provides advisory services, analytical tools and publications to companies to enable them to improve shareholder value and reduce risk through the adoption of improved corporate governance practices. The ISS research teams, which are separate from ISS-Corporate, will not give preferential treatment to, and are under no obligation to support, any proxy proposal of a corporate issuer nor provide a favorable rating, assessment, and/or any other favorable results to a corporate issuer (whether or not that corporate issuer has purchased products or services from ISS-Corporate). No statement from an employee of ISS-Corporate should be construed as a guarantee that ISS will recommend that its clients vote in favor of any particular proxy proposal or provide a favorable rating, assessment or other favorable result. For more information, please visit https://www.iss-corporate.com/

    ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently.
    ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,400 professionals operating across 33 global locations in 15 countries. Its approximately 6,400 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.