Across Corporate America, companies often incentivize candidates for C-suite positions with competitive compensation packages, and some have gone so far as to develop tools to better attract new talent. To better understand how much companies rely on such tools, Equilar conducted a study on new-hire awards granted to CEOs and CFOs across Equilar 500 companies—the 500 largest U.S. companies by revenue—over the last 10 years. The results reflect the fluctuation of the portion of new-hire awards in overall annual compensation and provide insight on whether companies are offering larger new-hire packages or simply raising the total compensation.
As a major tool utilized by corporations to incentivize talents, “new-hire awards” is a broad term that can include awards with several purposes. Inducement awards and make-whole awards, for example, are two different classifications of new-hire awards. While they both provide additional incentives, the former is forfeitable if executives terminate their employment before the required time period and the latter makes up for value lost on forfeited equity that the executive previously had. This study did not separate these two categories due to the lack of disclosure, and regarded them as a whole unit.
Among the study, there were 85 CEOs and 203 CFOs who received new-hire equity awards along with their appointments from fiscal year 2012 to fiscal year 2021. Total compensation has steadily increased for CEOs over the last seven years while the value of new-hire equity awards have either increased at a slower pace or stayed largely the same. As a result, new-hire awards weighed less as a percentage of the total compensation packages for both CEOs and CFOs.