ROCKVILLE, M.D. (March 27, 2018) – Institutional Shareholder Services Inc. (ISS), the leading provider of end-to-end governance and responsible investment solutions to the global financial community, today announced the release of an analysis by its data intelligence unit, ISS Analytics, of initial 2018 U.S. CEO pay trends.
Notably, CEO pay increases for fiscal 2017, as reflected in 2018 filings, are shaping up to be the largest since 2010 when companies provided sizeable compensation awards following down years after to the global financial crisis. For the 166 large capitalization, S&P500 companies analyzed by ISS Analytics through March 26 (and excluding changes in pension-based compensation), the median CEO pay increase from fiscal 2016 to 2017 stands at 9.5 percent, well above the 5 percent increase evidenced last year and second only over the past decade to the 15.4 percent jump in 2010.
“As in prior years, stock awards continue to be the primary driver of increased executive pay, although annual incentives were also up significantly in 2017,” said John Roe, Head of ISS Analytics, the data intelligence arm of ISS. “Notably, the largest pay increases in a decade will be evaluated by shareholders alongside inaugural corporate disclosures on pay ratios, adding fuel to the debate over executive pay levels this annual meeting season.”
Key findings from the analysis include:
- Stock award increases contributed to an overall 7.4 percent increase in CEO pay, while increases in paid-out annual incentives added another 2.6 percent.
- The aggregate value of stock option grants fell behind 2016 levels, acting to reduce overall pay by 2.2 percent.
- By industry, Transportation, Automobiles & Components, and Materials hold the top three positions for CEO pay gains, while Consumer Staples, Retailing, and Food Beverage & Tobacco hold the bottom three spots, with the latter three all registering a median year-over-year pay reduction.
- So far this year, 64 S&P 1,500 companies have reported median employee pay above $100,000 (the top-10 highest paying companies disclosing are listed here).
At a multiple of 208 and 207, Capital Goods and Materials are thus far the industries with the highest disclosed median pay gap between CEOs and rank-and-file employees.