"Robust corporate profits and strong stock market returns for much of the year" drove median CEO pay for the S&P 500 up from $11.7 million in 2017 to $12.4 million in 2018, according to an early report issued by the Wall Street Journal this week. However, the December dip in the stock market meant many companies posted lower total shareholder returns, causing a perceived mismatch in pay versus stock price performance. As the Journal notes, companies with earlier fiscal year-end dates had much higher 2018 median returns than those operating on a calendar year, highlighting the outsize impact of timing with regard to TSR as well as the importance of the mismatch between when equity is granted and when performance is measured in proxy filings and by proxy advisors.
As always, the early Wall Street Journal study only includes S&P 500 companies with performance data reported through March 15. This year's study included 132 companies and found that median CEO pay increase was 6.4% while median TSR was 2.9%. However, companies with fiscal years ending in the third quarter had median TSR of 22.4% due to the timing of the December stock market "tumble," while median return for companies on a calendar year was negative 9.7%, dragging down the overall median considerably. The Journal notes that average hourly earnings for nonsupervisory workers were up 3.5% from 2017.