Is CEO Pay Out of Balance?

Episode Summary

No topic stirs more widespread debate among shareholders, institutional investors, and the media than CEO compensation. Everyone has an opinion about how executive compensation should be structured, and rarely do those opinions mesh. As implementation of the CEO pay ratio draws near, all parties are directing even more attention to the golden question: Is CEO pay out of balance?

In this episode, David Chun, Founder & CEO of Equilar, a company that specializes in compensation data and cloud-based governance solutions, discusses the various trends at play in the market for CEOs.

I understand that there are people who are upset with where CEO pay has gone, but the reality is, the disparity [reflects what it takes to] run a public company, what it costs to bring a CEO on board, and… where [else] these CEOs could potentially [go].”
— David Chun, Founder & CEO of Equilar

Despite the heightened focus on CEO pay, Chun points out that say-on-pay proposals are receiving overwhelming shareholder support. In addition, many of the poor pay practices (e.g., single triggers, gross-ups) have been stripped away. Indeed, the 2017 proxy season set new records for say on pay approval with 99.5% of S&P 500 companies and 99% of Russell 3000 companies receiving majority shareholder support (click here to read the full report from Meridian Compensation Partners).

Finally, host TK Kerstetter asks Chun to put himself in the shoes of today’s compensation committee chairs. What should today’s committee’s look for in a compensation consultant? Chun outlines three thought-provoking questions to ask when deciding which compensation consultant is the right fit for your board.