Three-Quarters of Public Companies are Not Prepared to Communicate CEO Pay Ratio
Pearl Meyer survey shows neither proxy disclosure nor employee communication strategy is being addressed
NEW YORK—Oct. 24, 2017—Pearl Meyer has released its 2018 Looking Ahead to Executive Pay Practices survey. The data show that more than half of companies (58%) have completed a pro forma calculation of their CEO Pay Ratio, which will be a required disclosure in 2018 proxies. However, 73% of the public company directors and members of management surveyed have not had any board discussions on communicating the information. In a separate survey conducted in March of this year, 57% of respondents said the CEO Pay Ratio disclosure will have a negative effect on their workforce.
“While more companies are now completing their analysis, attention has to turn to messaging and how to mitigate any potential negative reactions,” said Sharon Podstupka, principal at Pearl Meyer. “The CEO Pay Ratio disclosure casts a new spotlight on compensation and management must provide their boards with a summary of how the company will be prepared to address the concerns that may arise from multiple stakeholder groups.”
Additional Key Findings
- Just 13% of the directors surveyed indicate their board has talked about the required disclosure of the ratio for the Compensation Discussion & Analysis (CD&A) in their 2018 proxy statement.
- Only 11% say they have discussed both internal and external communication.
- Companies in technology and healthcare/pharma/biotech appear to be most prepared in their communication, with 44% in each industry reporting some level of board discussion.
- Forty-two percent of public companies are projecting a CEO Pay Ratio between 101:1 and 250:1, while 18% expect a ratio of 251:1 or higher.
Additional CEO Pay Ratio Resources
- Client Alert on the SEC’s newest CEO Pay Ratio Rule guidance, issued September 21, 2017
- Pearl Meyer’s Guide to navigating the CEO Pay Ratio calculation and disclosure process
- What HR Should Know about the CEO Pay Ratio and its effect on the workforce
About the Survey
The annual Looking Ahead to Executive Pay Practices survey is published by Pearl Meyer each fall with detailed information on how companies plan to adjust the base and incentive pay levels for their C-suite in the coming year, along with additional data on current trends and topics in executive compensation. An executive summary is publicly available and the full survey results are available for purchase.