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?

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