Variability in the CEO pay ratio is "largely driven by differences in median employee pay across industry sectors," concluded Shearman & Sterling’s 2018 Corporate Governance & Executive Compensation Survey. The study, which reviews key governance characteristics for the 100 largest US public companies listed on the NYSE or Nasdaq, included a comprehensive review of pay ratio disclosures for 400 of the S&P 500 companies, finding that:
- Median pay ratio was 162:1 with median employee pay at $69,000 and CEO pay at $12.3 million (this ties with similar Center data from the S&P 500)
- About 16% of companies presented an alternative ratio (usually lower than the required ratio) and only one company provided a comparison to peers
- About 77% of companies located the pay ratio in the executive compensation tables section of the proxy (after the CD&A) and the average length of disclosure was 432 words, although this differed significantly by company
- About 300 companies disclosed the components of their Consistently Applied Compensation Measure. Among these, all disclosures included base salary in the calculation, while 205 also included annual bonus and 79 included equity grants
- The majority (195) of companies used fiscal year end as the calculation date
- The most common exemption used was de minimis (40%)
- Cybersecurity. The Board (or a committee of the Board) has responsibility for cybersecurity in 84 of the top 100 companies, up from 59 in 2017, and 35 of the top 100 specifically identified directors with cybersecurity experience (up from 29 in 2017).
- Disclosure. 82% of the top 100 companies made shareholder engagement disclosures in 2018, up from 74% in 2017. Voluntary disclosures of other governance topics were also on the rise, such as the director self-evaluation process (61 companies), management succession planning (49), sustainability and environmental stewardship (55) and political contributions (38).
- Board Skills Matrix. 35 of the top 100 provided a full skills matrix for each director, while 36 provided only an aggregate number of directors possessing each skill and 29 provided no matrix at all.