Shareholders are hitting back at sky-high CEO pay packages at a time when many compensation committees appear to be treading carefully.
Average say-on-pay support has rebounded from pandemic-era lows across the S&P 500, but CEO pay levels aren't rising as rapidly as they did in the recent past. With shareholders bristling at many of the top earners' pay packages, most comp committees are treading the fine line between granting market-competitive CEO pay levels and avoiding the perception of "overpaying" their CEOs, sources told Agenda.
Moreover, pay rose for CEOs of firms with higher cumulative total shareholder returns and declined for CEOs with lower cumulative TSR, and that's a positive signal. Meanwhile, say-on-pay support is consistent with last year's levels. At meetings held through June 10 at S&P 500 companies this year, average say-on-pay backing was 89.1%, according to public company data. Compensation professionals say that any say-on-pay vote lower than roughly 88% to 90% is cause for director concern.
Most of the increase to median CEO pay appears to be from performance-based components of compensation and less so from base salary increases, Matt Turner, president of executive compensation at Pearl Meyer, told Agenda.