Ed Hauder
Nathan Williams
The reintroduction of U.S. tariffs created an unexpected challenge for compensation committees as they finalized 2025 executive incentive payouts. Boards faced an important governance question: should tariff-related impacts be excluded from incentive results, or should executives remain accountable for the financial consequences of changing trade policy?
To understand how companies responded, Meridian reviewed proxy statements across the S&P 500 to identify where annual and long-term incentive awards were adjusted for tariff impacts. The analysis provides insight into prevailing market practice and the governance principles shaping these decisions.
Key Takeaways
• Only 5% of S&P 500 companies adjusted annual incentive payouts.
• Just 1.4% adjusted long-term incentive awards.
• Companies making adjustments generally relied on pre-established frameworks rather than discretionary decisions.
• Adjustments were concentrated in industries most affected by tariffs.
• Most boards concluded that macroeconomic disruption remained part of management accountability.
Why It Matters
The findings reinforce that compensation committees continue to place significant weight on pay-for-performance principles, even during periods of substantial economic disruption. For boards considering future adjustments, governance frameworks established in advance remain considerably easier to defend than after-the-fact discretion.
