A year that included both a market recession and a rebound, 2020 saw equity compensation for named executive officers increase by 3.7% at companies in the S&P 500. Some companies doled out awards last year that were far larger than the average in the form of leadership awards, long-term incentives, and retention awards.
The median named executive officer at S&P 500 companies is likely to see a bump in equity pay for the coming year, sources say. That continues a long-term trend. The trend is even more pronounced when looking at equity awards to CEOs who held their positions for the full year.
Compensation experts suggest that companies may lean more heavily toward time-based equity compared to performance-based shares. According to Matt Turner, a managing director at Pearl Meyer, that’s because executive goal-setting remains a challenge in the COVID era.
And, despite the decline in the use of stock options, the vehicle remains prevalent with young companies, especially companies that are emerging from an IPO, said Turner. “Stock options are better suited for high-growth and high-risk situations,” he said.