The Securities and Exchange Commission’s recently finalized rules requiring companies to report more detailed “pay-versus-performance” data in their proxy statements are putting significant pressure on companies facing scrutiny over executive pay.
Additionally, financial turmoil as well as heightened environmental, social and governance or ESG standards are leading investors to increasingly question how much companies are paying their executives.
In an interview with Bloomberg, Executive Compensation & Benefits partner Jonathan Ocker said, “The pressure will increase, not abate.”
Ocker added that mega grants, in which executives are given large stock grants in exchange for achieving ambitious performance goals, can be a specific source of discontent for shareholders and can spark questions about why such large payouts are necessary for the business. The pandemic exacerbated these concerns, he said, as shareholders became more skeptical of high executive pay amid layoffs and pay cuts.