Pearl Meyer Releases Comprehensive Research Study on CEO Pay Ratio Disclosures

--Report based on data from more than 2000 public proxy filings is released at the National Association of Corporate Directors' Global Board Leaders' Summit--

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Pearl Meyer

Oct 01, 2018, 08:30 ET

WASHINGTON, Oct. 1, 2018 /PRNewswire/ -- Today executive compensation consultancy Pearl Meyer announced availability of its latest research report The CEO Pay Ratio: Data and Perspectives from the 2018 Proxy Season, based on information from Main Data Group, and published in conjunction with NACD.

Pearl Meyer analyzed more than 45 data points for each of 2005 public company proxy filings available on June 30, 2018. Industry, firm revenue, number of employees, and percentage of a company's workforce based outside the US had important impact on the average CEO Pay Ratios.

"While the CEO Pay Ratio has not proven to be the lightening rod issue many anticipated, it is now a required data point in the executive compensation conversation and one that directors and management teams must fully understand," said David Swinford, president and CEO of Pearl Meyer. "Our findings from this research are consistent with our expectations and show that comparisons among peer companies are ill-advised. Boards should know where they stand from a disclosure standpoint, but should not undertake any compensation program changes based on the number."

The study found the average CEO Pay Ratio is 144:1 and the median ratio is 69:1. There are numerous outliers, including several cases where CEOs did not receive pay or were paid a nominal sum. As expected, the consumer discretionary industry has the highest ratios with an average of 384, while the utilities, financial, and energy industries are lowest.

Additional Key Findings:

Average median employee total compensation is $80,992 and is highest among companies with fewer than 500 employees.
There is no correlation between the CEO Pay Ratio and company performance (as measured by three-year average total shareholder return).
There is no correlation between the CEO Pay Ratio and CEO tenure, and CEO tenure across companies tends to be fairly consistent at between 6.5 and 7.5 years.

Additional Resources:

Visit Main Data Group, the leading provider of high-resolution executive compensation benchmarking and corporate governance analytics
Will companies benchmark CEO Pay Ratio relative to their peers? See the Pearl Meyer Quick Poll results
Pearl Meyer On Point Survey results: Communicating Compensation in 2018
Numerous articles and perspectives on the CEO Pay Ratio are available at www.pearlmeyer.com/ceo-pay-ratio

About Pearl Meyer
Pearl Meyer is the leading advisor to boards and senior management on the alignment of executive compensation with business and leadership strategy, making pay programs a powerful catalyst for value creation and competitive advantage. Pearl Meyer's global clients stand at the forefront of their industries and range from emerging high-growth, not-for-profit, and private companies to the Fortune 500 and FTSE 350. The firm has offices in New York, Atlanta, Boston, Charlotte, Chicago, Houston, London, Los Angeles, and San Jose.