2023 Meridian Corporate Governance and Incentive Design Survey

Meridian’s 2023 Corporate Governance and Incentive Design Survey offers insights into key board governance practices, compensation-related proxy disclosures, and annual and long-term incentive design practices of 200 large cap U.S. corporations (with median revenue of $22 billion and median market cap of $42 billion). Highlights of the Survey are outlined below.

Highlights

• Corporate Responsibility, Sustainability and Climate Disclosures. 83% of companies disclosed internal tracking of long-term sustainability or climate change goals. Additionally, 89% of companies referenced their Corporate Responsibility Report in their most recent proxy.

• Director Overboarding. 55% of companies disclosed director overboarding policies.

• Mandatory Retirement Age is Typical. 78% of companies disclosed a mandatory retirement age policy for board members – nearly all companies defined retirement age between 72 and 75.

• Compensation-Related Shareholder Proposals in 2023. Compensation-related proposals were among the least common shareholder proposal. 17% of companies received a compensation-related proposal – and most of these proposals received limited shareholder support.

• Pay and Performance Disclosure Landscape Changes. Fewer companies included volitional pay and performance disclosures this year (14% vs. 20% last year). This trend coincides with the introduction of the SEC’s new mandatory pay versus performance disclosure.

• Non-Financial Metric Prevalence Increases. Most companies (80%) include non-financial measures in the annual incentive plan. Environmental, sustainability and human capital metrics have continued to increase in prevalence; however, weighting of these metrics (implicit or explicit) remains low at 5%-10%.

• Relative TSR Used by Nearly Four in Five Meridian 200 Companies. 79% of companies included a relative TSR measure in performance awards; most incorporate as a weighted measure, rather than a modifier, and 90% of companies pair TSR with at least one other performance measure.

Full survey results can be downloaded by clicking on the “Download Insight as a PDF” on this page. This survey was authored by Sam Bricker and other consultants. Questions and comments should be directed to Mr. Bricker at sbricker@meridiancp.com or (224) 355-4762.

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The Client Update is prepared by Meridian Compensation Partners’ Governance and Regulatory Team led by Donald Kalfen. Questions regarding this Client Update or executive compensation technical issues may be directed to Donald Kalfen at 847-347-2524 or dkalfen@meridiancp.com.

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.

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