Not only have the CEOs of Gamco Investors, CBS Corp, Viacom, Regeneron Pharmaceuticals, Walt Disney, Yahoo, and Discovery Communications featured on the list of the 25 highest paid executives in America every year since 2012, but their pay has almost always been driven by factors other than the price of their company shares, according to new research by The Conference Board.

The Conference Board is a global, independent business membership and research association. Its report, “CEO and Executive Compensation Practices: 2016 Edition,” was a collaboration with Arthur J. Gallagher & Co., a risk management services firm with a human resources and compensation consulting practice, and MylogIQ, an SEC-filings data analysis firm and provider of corporate filings services. It looked at trends and developments in senior management compensation at companies that issue equity securities registered with the Securities and Exchange Commission and were included in the Russell 3000 index as of May 2016. 

“In the last few years, companies have been responding to public scrutiny over pay-for-performance and made significant adjustments to their compensation policies—curbing base salaries and annual bonuses, introducing retention requirements on equity awards, and shifting from single metric to blended-metric incentive plans,” says Matteo Tonello, managing director of corporate Leadership research at The Conference Board and co-author of the report. “And yet we found that pay and performance alignment, at least where performance is measured in terms of total shareholder return (TSR), continues to elude some industries’ chief executives.”

Top-level compensation is often due to performance metrics other than TSR, Tonello explains. For example, at asset management public company GAMCO, Mario Gabelli receives fees related to the total assets that his investment company manages, not only the returns generated by those invested assets. At media companies Viacom and CBS, the performance targets of choice are operating income and free cash flow, both for annual and long-term incentive.

“The compensation required to retain a CEO is inevitably distorted by the generous compensation offered by those companies to the artists and other media talent needed to appeal to wide audiences,” Tonello says. “Therefore, at least for these individuals, an analysis of TSR performance is only going to tell some of the story.”

CEOs of smaller companies benefited from the highest total pay growth in 2015, but the compensation gap between them and their colleagues in the S&P 500 remains wide, is another of the report’s findings. Excluding the effects of pensions, the increase in median total compensation for CEOs in the S&P 500 was 2.9 percent, contributing to a six-year rise (from 2010) of 22.25 percent. The equivalent figures for the Russell 3000 were 4.2 percent and 54.7 percent respectively.

In the smallest company bracket by revenue, under $100 million, the increase in median total pay was 37 percent, just between 2014 and 2015 levels. The CEOs of the largest companies ($50 billion and over) received a rise in median pay of 10.8 percent, while smaller organizations saw their median compensation shrink even when excluding the effects of pensions.

Another data point: smaller increases in total CEO compensation documented for some industries (including energy, utilities, and telecommunication services) reflect the lackluster performance caused by the slump in commodity prices, new regulatory restraints, and market saturation. According to analysis, and again excluding the effect of pension change, CEOs in those sectors saw median total compensation fall; for energy firm CEOs, the decrease was as large as 17.7 percent. In contrast, CEOs of companies in the consumer discretionary (such as entertainment and travel), consumer staples, and health care sectors all experienced double digit increases, with the highest going to consumer staples CEOs at 28 percent. The report notes that no industry reported a negative six-year change, with health care CEOs experiencing median growth in total compensation between 2010 and 2015 of 94 percent, from $1,817,000 to $3,525,000.

As companies continue to strive to achieve pay-for-performance, a rise in the value of stock awards drives the bulk of total CEO compensation increases, the report says. Stock awards have taken up the slack of virtually every other component of pay.

S&P 500 CEOs receive 47 percent of their total pay in the form of stock awards, up from a third in 2010, while in the Russell 3000 it has risen from less than a quarter of total pay to more than a third. More specifically, in 2015 the value of stock awards grew by over 23 percent at the median for CEOs in the Russell 3000, and by 13.7 percent for CEOs in the S&P 500. Over the last six years, the growth in the value of median stock awards for the Russell 3000 has been an impressive 291.4 percent (and as high as 358.3 percent for small companies with asset values between $500 and $999 million).

In the first quarter of 2015, when decisions about most stock awards are made, awarded stocks in both the S&P 500 and the Russell 3000 were higher than at the beginning of 2014, but it remains to be seen whether the volatility these equity indices registered in 2015 will curb the rise of stock award value in 2016.

With an inflation rate of less than 1 percent for both 2014 and 2015, market pressure and the looming application of the new SEC pay ratio rules explain the moderate rises in CEO base salary, Tonello says. Compared to 2015, base salaries rose 4 and 4.7 percent for CEOs in the S&P 500 and the Russell 3000, respectively.

Stock options continue to lose importance as a compensation incentive in large companies, where scrutiny on share value manipulation and other unintended behavioral effects has been felt the most. However, when smaller organizations are analyzed, the move away from stock options is not as significant as is commonly claimed. Options as a percent of total CEO pay fell from around 18 percent to 15 percent in the S&P 500. In contrast, CEOs in the Russell 3000 have been steadily receiving around 15 percent of their pay in stock options in each of the last six years, with little or no change in the percentage.

In 2015, for the first time in years, the annual growth in percentage points of total near executive officer compensation exceeded that of CEOs—a sign that companies may be concerned about talent retention at the top in a tightening job market.

The increasing attention paid by investors and other stakeholders to sustainability and long-termism is prompting companies to add non-financial targets to their incentive plans, the report says. The number of performance measures included in an incentive plan has steadily increased over the past five years, expanding to a series of qualitative aspects of firm performance—ranging from customer satisfaction to the implementation of safety standards and from employee turnover rates to environmental impact measures. When non-financial measures are included in the target count, more than a quarter of firms use more than six performance metrics in their short-term incentive plans.