CEO pay increased 2.7% in 2022, WTW proxy analysis finds
May 24 2023 - 12:04PM
Chief executive officers (CEOs) at the largest U.S. corporations
saw their increase in total compensation slow dramatically in 2022,
driven largely by a decrease in annual bonuses and slower growth in
long-term incentives, according to a new analysis of proxy
disclosures by WTW (NASDAQ: WTW), a leading global advisory,
broking and solutions company.
The WTW analysis found total pay for CEOs increased 2.7% in
2022, sharply lower than the 18.3% median increase in 2021.
Additionally, the percentage of CEOs who received a reduction in
total pay doubled from 21% in 2021 to 42% in 2022. Total pay, as
reported in the Summary Compensation Table (SCT) in company proxy
statements, includes base salary, actual annual and long-term cash
bonuses, the grant-date value of long-term incentives (such as
stock options, restricted stock and long-term performance shares),
the value of perquisites, earnings from deferred compensation and
the change in value of executive pensions.
The analysis, based on 450 S&P 1500 companies that filed
proxies disclosing 2022 pay by the end of April, found annual
bonuses, which soared by 36.8% in 2021, declined 2.5% last year.
While annual bonuses were lower, payouts remained above target
(123% of target) in 2022, but this was well below 2021 when payouts
were 148% of target. The value of earned long-term incentives rose
10% in 2022 – less than the 44% increase in 2021 but still building
on 2021’s significant growth rate. Salaries for CEO increased 3.1%
in 2022, following a year in which the average CEO salary remained
unchanged.
“CEO pay stabilized last year and is returning to levels
typically seen before the pandemic,” said Don Delves, North America
leader, Executive Compensation, WTW. “Given the stock market
performance and lingering economic uncertainties, the fact that
annual and long-term incentives weakened last year demonstrates the
pay-for-performance model is working at most companies.”
More companies adding ESG metrics to incentive
plans
The analysis also revealed over half of the S&P 1500
companies (56%) reported using an ESG performance measure in their
annual incentive plan in 2022, up from 49% in 2021. The use
of ESG performance measures in long-term incentive plans, however,
remains relatively low – 8% in 2022 compared with 7% in 2021. A
subset of 227 S&P 500 companies from the analysis also revealed
growing interest in linking executive incentive awards to ESG
measures. Twenty-one companies added an ESG measure to their annual
incentive plans, while 47 companies expanded their use of ESG
metrics. Additionally, 9 companies added an ESG metric to their
long-term incentive plans while two companies expanded the use of
ESG metrics in their long-term incentive plans.
“We are seeing continued interest by boards in linking executive
pay to ESG priorities, particularly those priorities they feel they
may be linked to sustainable value creation,” said Kenneth Kuk,
senior director, Work & Rewards, WTW. “Many boards of directors
see executive incentives as an effective way to hold CEOs and other
corporate leaders accountable to meeting ESG goals they believe are
most critical to business strategy, such as carbon emission
reduction and diverse representation for management and the
workforce.”
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance. Working shoulder to shoulder
with our clients, we uncover opportunities for sustainable success
— and provide perspective that moves you.
Learn more at wtwco.com.
Media contact:
Ed Emerman: +1 609 240 2766
eemerman@eaglepr.com
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