Guidelines for Mitigating Reputational Risk in C-Suite Pay
- Peer group comparison and industry benchmarking has resulted in significant increases in C-Suite compensation across industries in the US. Given the growing income inequality in the country1, SSGA sees increased reputational risk arising from the high quantum of pay to C-Suite executives; in 2018, this risk will be further heightened when companies begin disclosing CEO to median employee pay as mandated by the Securities and Exchange Commission (SEC).
- SSGA has typically focused its attention on enhancing the pay-for-performance element of C-Suite compensation. However, with overall CEO pay remaining largely stable or increasing despite performance challenges2, the variability in pay and its link to performance is not apparent to investors.