Analyzing Proxy Trends

There weren’t many surprises in the overview of executive pay trends offered by David Chun, CEO of Equilar, and Patrick McGurn, special counsel at Institutional Shareholder Services, during a session at WorldatWork’s 2011 Total Rewards Conference.

Based on their review of several hundred proxy statements of S&P 500 companies, Chun said the $9 million average compensation for CEOs was at a record level, and was 28 percent higher than 2009 when CEO pay dropped 10 percent from 2008.

In general, CEO compensation was composed of cash bonus (43.3 percent), stock (39.4 percent), stock options (16.4 percent), salary (5 percent) and other (13.1 percent), he said. One trend he has seen is a continued preference for complexity in equity grant design, with three-quarters of companies using two or more long-term-incentive vehicles (primarily options, time-vested stock and performance shares).

As for say-on-pay, McGurn said 23 companies failed to get shareholder support for their pay practices — and of them, 21 have had close to double-digit negative returns for three years.

 As for the other companies, three-quarters of them saw approval rates of 90 percent or higher in support of management pay packages.

There was some pushback from shareholders, he said, on frequency of say-on-pay votes. About half of the S&P 500 companies sought approval for triennial voting while two-thirds of shareholders voted instead in favor of annual approval processes.