CEO Pay Fell Among the Largest U.S. Companies in 2020

CEO pay fell 1.5% in 2020 to $12 million, down from $12.2 million the year prior, according to a new report from Equilar, CEO Pay Trends, which features independent commentary from Meridian Compensation Partners. The report analyzed total reported compensation for chief executives of the Equilar 500, the largest U.S. companies by revenue.

Though overall pay levels dipped slightly, the impact was inconsistent. Cash compensation was lower than the previous year as company heads took salary cuts in solidarity with their employees and trimmed discretionary bonuses when revenues and other financials missed targets for the year. These trends resulted in a 2% decrease in median salary and a 1.5% decrease in median annual cash bonuses when compared with 2019.

Meanwhile, the median value of stock awards increased 9.7%. Given that CEO pay is primarily awarded through equity offered as long-term incentives for retention and motivation, the bolstered value of company shares in a record year for the stock market kept equity values strong.

The pandemic also crowned industry favorites while others suffered. CEOs in communication services, which primarily includes telecom, media and social media companies, saw median total compensation of $22.4 million, up from $19.8 million in 2019. This sector benefited from an essential role in keeping business and home networks up and running, their ability to keep people entertained while sequestered in their homes, and the media frenzy of a presidential election year, among other factors.

The energy sector, which had already seen compensation levels fall in 2019, saw further declines as COVID-19 fostered a challenging environment for the industry. With the second-lowest median total compensation at $10.9 million in 2020, energy CEOs have seen a 23% decrease in pay at the median over the past two years.

"The impact of COVID-19 and the resulting market reaction differed significantly across industries and even across companies within the same industry," said Caroline Montalbano, Lead Consultant at Meridian Compensation Partners. "Against the backdrop of the pandemic, compensation committees and management teams had to navigate the challenge of continuing to engage executive talent while also reflecting the broader experience of all stakeholders."

When looking back at 2020, the stability of CEO pay trends may be seen as a positive sign in an otherwise volatile landscape. Though the overall structure, value and benefits of the system to all corporate stakeholders will continue to be up for debate, executive compensation has evolved as a means to drive predictable, transparent results, and 2020 delivered in that regard.

Other key findings from the report include:

• Performance-based incentives continue to be the primary vehicle for CEO compensation, with five in six companies offering this type of equity to their leading executives
• The pay gap widened between CEOs and their employees, as the CEO Pay Ratio increased at the median from 189:1 to 193:1

Request a copy of the full report by filling out the form or by contacting Equilar directly.

About the Report

CEO Pay Trends, an Equilar publication, analyzes the compensation data of chief executive officers at Equilar 500 companies over the last five fiscal years. The data points and figures captured in the report highlight trends in the compensation of chief executives and how companies award that compensation. Meridian Compensation Partners has provided independent commentary for context on the impact of the pandemic on CEO pay and what to expect in years to come.

About Equilar

Equilar is the leading provider of corporate leadership data solutions. Companies of all sizes rely on Equilar for their most important business decisions, including 70% of the Fortune 500 and institutional investors representing over $20 trillion in assets. Equilar offers data-driven solutions for business development, recruiting, executive compensation and shareholder engagement that bring together business leaders to drive exceptional results. Founded in 2000, Equilar is cited regularly by Associated Press, Bloomberg, CNBC, New York Times, The Wall Street Journal and other leading media outlets. Learn more at equilar.com.

About Meridian Compensation Partners

Meridian Compensation Partners, LLC provides executive compensation consulting and corporate governance services to over 700 public and private corporations. With 10 offices and 80 associates in the U.S. and Canada, our services include board level advisory services, compensation program design, and market intelligence on executive pay and governance matters. www.meridiancp.com.