May 18, 2023 Executive Compensation Shareholder Voting, SOP, and Proxy Results Reports

2023 Pay Versus Performance Report S&P 500 and Russell 3000 company performance disclosure tracking

CAP to SCT ratios remain positively correlated with TSR over the reported period

We have tracked pay versus performance disclosures for 625 Russell 3000 companies (269 within the S&P 500) thus far in 2023. The ratio of compensation actually paid (CAP) to summary compensation table pay (SCT) has shown a positive correlation with TSR. The 2022 median CAP to SCT ratio is 0.9x for the PEO and NEO average, and median 1-Year TSR is -4%. The Energy sector has the highest median 2022 CAP to SCT ratio at 1.8x. The Consumer Discretionary and Communication Services sectors represent the lowest at 0.5x.

A study of the outliers within the 2022 reporting period (defined as two standard deviations from the mean) shows that companies with negative TSR make up 56% of the outlier sample, and the Energy sector has the most outliers (21% of the outlier sample).

In 2021, the sample reported a higher average TSR and prevalence of companies with a CAP to TSR ratio above 1.0x. Notably, the R-squared between the two was the lowest of the three reported years.

Contributors

Todd Sirras

Austin Vanbastelaer

Justin Beck

Kyle McCarthy

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