Dodd-Frank is on the horizon, and as a result, many companies are re-examining their compensation programs. One important aspect of this process is looking at peer groups, and it’s clear from our study of the S&P 1500 that companies are increasingly involved in managing them. 63.9 percent of firms in the S&P 1500 added, deleted, or replaced at least one peer group member in 2009. With most peer groups consisting of 11 to 20 companies (the median was 17), this trend shows that companies are seriously considering the implications of their peer group’s composition.
As in past years, the 2009 study found that smaller companies are more likely to benchmark to higher-revenue peers. S&P 600 companies had a median revenue rank in the 38th percentile, while S&P 400 companies ranked in the 43rd percentile. S&P 500 companies were the most conservative, with a median revenue rank right at the 50th percentile.