The 2023 proxy season is officially underway. Public companies based in the United States will file their proxy statements (DEF14A), highlighting the various components of their governance policies, over the next few months. Among the most prominent and highly discussed issues featured in proxies are those related to executive compensation. Of course, this year’s proxy season is the first to feature newly required Pay Versus Performance (PvP) disclosures following the SEC’s August 2022 announcement.
In this post, Equilar analyzes a sample of early proxies filed by Equilar 500 companies—the 500 largest U.S. public companies by revenue—as of March 14, 2023. While several thousands more proxy statements will be filed in the months to come, the purpose of this study is to offer a preview of executive compensation pay packages from 2022 and key trends to watch for this proxy season, including those around PvP disclosures.
CEO Pay Continues to Surge
From 2018 to 2020, CEO pay remained relatively flat around $12 million at the median for Equilar 500 companies. However, in 2021, compensation jumped 18.3% to $14.2 million. The significant bump in 2021 could be credited to the fact that many companies elected to reward their CEOs for guiding them through the turbulence of the COVID-19 pandemic in the form of bonuses. Additionally, 2021 was a strong market year prior to any inflation and recession concerns.
Nevertheless, the uptick in compensation for the top executive officer continued in 2022, according to early indications. Among the sample of 154 Equilar 500 CEOs observed in this study, median CEO compensation increased by 7.7% to $15.3 million in 2022. In this era of pay for performance, it comes as no surprise that the majority of CEO compensation comes in the form of stock awards.
Figure 1: CEO Total Direct Compensation (Equilar 500)