Meridian’s 2021 Trends and Developments in Executive Compensation Survey provides an overview of the current environment and signals the direction in which companies are moving with respect to executive compensation pay practices.
Meridian recently surveyed over 300 companies and found the following key results:
Short-Term Incentives – COVID Environment
■ Most companies (73%) did not make mid-year changes to 2020 bonus plans (e.g., revise goals, change metrics, shorten performance period)
■ Over one-third of companies (38%) increased use of discretion in determining 2020 bonus payouts
■ More than one-half (57%) indicated bonus payouts for 2020 performance were at or below target
Short-Term Incentives – 2021 Design
■ Widening the goal range was the most common adjustment to 2021 short-term plan design (37%)
■ One-half of participants set 2021 threshold goals for primary earnings-related measures higher than 2020 actual results, similar to prior year
■ Most companies (57%) use multiple financial metrics in their annual plan; profit measures remain the most prevalent
■ Increasing from 17% in 2020, just under 25% of companies included ESG metrics in 2021
Long-Term Incentives – COVID Environment
■ Performance awards vesting in 2020 most commonly (58%) paid out at or below target
■ Vast majority of companies (91%) did not make adjustments to outstanding performance cycles
■ Few companies (15%) granted off-cycle special awards in 2020 – most often to select individuals
Long-Term Incentives – 2021 Design
■ Most companies (64%) are preserving current long-term performance metrics and vehicles used
■ Consistent with prior year, 65% of companies use multiple metrics in long-term plans
■ The use of performance awards has slightly decreased from the prior year (88% vs 95%)
■ TSR remained the most prevalent long-term performance measure (consistent with 2020)
■ Only 2% of companies included an ESG metric in their 2021 long-term plan design
Full survey results can be downloaded by clicking the “Download Insight as a PDF” button above. This Survey was authored by Katherine Beall of Meridian Compensation Partners, LLC. Questions and comments on the Survey should be directed to Ms. Beall at firstname.lastname@example.org or (847) 235-3626.
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This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.