2015 Top 250 Report

Pay-for-performance continues to grow in importance and influence the structure and design of long-term incentives. Long-awaited Dodd-Frank Act rules related to pay-for-performance disclosure were proposed and CEO pay ratio disclosure is finalized. Pressure is mounting on internal company decision-makers to define pay-for-performance in a way that reflects the specific dynamics of their respective companies while being cognizant of external expectations. Performance award use amongst the Top 250 companies has reached a new apex of 90% prevalence; 17 companies in this year’s Top 250 added performance awards to their long-term incentive programs. In connection with the growth in performance shares, there was also a noticeable shift away from stock options/SARs in the form of an 8% decline in usage year-over-year (i.e., 71% in 2014 report and 63% in this year’s report). The continuing decline in the use of stock options is at least partially the result of proxy advisory firms taking the stance that stock options are not performance-based equity; while this stance can be debated, the trend away from options is apparent.

The 43rd annual Frederic W. Cook & Co. Top 250 Report, details the long-term incentive practices of the 250 largest companies in the S&P 500. Notable trends and key findings from this year’s study may be found in the report.