Reported pay vs realized pay
Also called realized compensation, take-home pay vs reported pay.
Reported pay is the SCT grant-date total for a fiscal year. Realized pay is cash received plus equity that actually vested or was exercised that year, which can be much higher or lower than the reported figure.
What it is
Reported pay is what the Summary Compensation Table says for a fiscal year: salary, cash incentives, grant-date equity, and other SCT columns, totaled as filed. Realized pay (sometimes called realized compensation or take-home from equity) is what actually became cash or vested shares in a period: salary and bonus paid, plus the value of stock that vested or options that were exercised.
The two series can diverge for years. A new CEO may have huge reported pay from a new-hire grant and little realized equity. A long-tenured CEO may have modest new grants and large vesting from older awards. Form 4 filings show some of the realized events; they are not a substitute for the SCT.
Why companies use it
Companies report grant-date pay because the SEC table is built that way and because boards want credit (or criticism) in the year they granted awards.
Some issuers also publish a supplemental “realized” or “realizable” pay chart in the CD&A to argue that SCT totals overstate what the executive has actually received, especially after a stock-price drop.
Pros
- Keeping the two ideas separate prevents treating an accounting grant as a wire transfer.
- Reported pay is standardized; realized pay, when a company calculates it, can show whether performance awards actually paid.
- Investors who want to judge this year’s board decision use reported pay; those studying cash extraction use realized figures and Form 4s.
Cons
- Headlines almost always use reported pay and call it “what the CEO made.”
- Realized-pay methodologies differ: some include option exercises, some only vesting, some subtract taxes.
- Compensation actually paid (CAP) is a third number, mark-to-market, and is not realized pay either.
Examples
Grant year vs vest year
Year 1 SCT Stock Awards: $25 million for a three-year RSU. Realized equity in Year 1 may be near zero. In Year 3, SCT stock awards might be $8 million of new grants while $25 million of older RSUs vest. Reported and realized peak in different years.
Media vs filing
A story that adds Form 4 sale proceeds to SCT Total double-counts or mixes events. Sale proceeds are a liquidity event for shares the executive already held, not a new SCT grant.
On CompensationBase
CompensationBase shows reported SCT pay. Realized amounts from later vesting, exercise, or sales are not substituted into rankings or profile totals.
Related terms
- Grant-date fair value
The accounting value of equity awards on the day they are granted, which is what the Summary Compensation Table reports for stock and option awards—not the value later realized when shares vest or are sold.
- Total compensation
The headline pay figure CompensationBase ranks and displays: the Summary Compensation Table Total column as filed, not a recomputed sum of the component bars.
- Compensation actually paid
A Pay Versus Performance figure that adjusts SCT amounts for equity fair-value changes and pension. It is not the SCT Total CompensationBase ranks.
- Vesting
The schedule on which an executive earns the right to keep equity. SCT totals use grant-date value, so a large reported year does not mean the shares have vested.