CEO pay continued to increase in the wake of the implementation of “say-on-pay” provisions in post-crisis financial reforms, according to a study released by U.S.-based consulting firm Pay Governance LLC .
The study, which examines CEO pay trends at more than 200 S&P 500 companies in the years before and after the adoption of say-on-pay shareholder votes, finds that chief executive compensation has continued to rise in the face of added shareholder scrutiny.
“Our research found that median CEO pay has continued to rise post-SOP,” says Ira Kay, managing partner at Pay Governance, in a statement. “While this continued increase was disappointing to the advocates of SOP, this was not surprising to corporate directors, executives and most institutional investors. It is arguably another example of the CEO labor market’s relative competitiveness.”
The firm also notes that, while CEO pay continued to rise, the distribution of pay was more compressed since shareholder votes on executive pay were introduced. It reports that this was “driven primarily by flat CEO pay at the 90th percentile of the sample for several years.”
“This is a critical finding that suggests that the labor market for CEO pay remains robust, but the post-SOP governance environment may have constrained pay at the top of the distribution,” adds Blaine Martin, consultant and researcher at Pay Governance. “While there may be a number or factors driving this observation, we believe that proxy advisor and institutional investor commentary may have resulted in changes to benchmarking policies.”