Study of 2013 Short- and Long-Term Incentive Design Criterion Among Top 200 S&P 500 Companies

Abstract

In order to investigate what (and how much) is being shared in annual proxy statements about executive pay packages and how incentive pay is designed, Arthur J. Gallagher & Co.’s Human Resources & Compensation Consulting Practice has conducted a study of the 2014 annual proxy statement disclosures for 200 of the top U.S. companies (based on revenue and market capitalization). This is the sixth consecutive year we have conducted this in-depth analysis for the top 200 public companies.

This study provides a behind-the-scenes look at how incentives are being structured to connect pay and performance. Because incentive compensation comprises the bulk of executive pay packages at publicly-traded companies, boards of directors and senior management are continually searching for the right performance measures to balance rewards with financial, stock price and operational performance as well as non-financial and individual performance.

Keywords: executive compensation, incentive plan design, short-term incentives, long-term incentives, pay-for-performance, proxy statement disclosures, say on pay, SEC rules, performance-based equity, stock options, S&P 500