Supplemental CEO Pay Ratios
As many companies disclosed CEO pay ratios for the first time this proxy season, this enlightening blog by Pearl Meyer did a nice job of tracking supplemental filers, while shedding light on the pros and cons of companies that chose to disclose a supplemental ratio verses those that did not. The blog notes that of 1,039 CEO pay ratio disclosures, only 99 companies also filed a supplemental ratio. On average, the supplemental ratios turned out to be lower while 14 turned out to be higher. Companies definitely had a strategy for this approach.
See this intro from the Pearl Meyer blog:
One of the items most deliberated with our clients was whether or not to provide a supplemental pay ratio using a different methodology from the required rules. Highlights of our analysis of data captured in mid- April indicate that:
- While few companies chose to disclose a supplemental ratio, those that did were able to show a significantly lower ratio in many cases.
- The desire to smooth out the impact of one-time or multi-year grants to a CEO was the most commonly occurring reason to provide a supplemental ratio.
- The most profound decrease from the required ratio occurred when companies provided a supplemental ratio that excluded part-time and seasonal employees.
- A number of companies provided a supplemental ratio that was greater than the required ratio, mostly likely to avoid a drastic increased ratio in 2019.
Will we see an uptick in supplemental CEO pay ratio filers next proxy season?
The blog post is definitely worth a read, check it out here: The Catch 22 of the Disclosure Season: Was the Supplemental CEO Pay Ratio Worth It?