In Depth
Realizable pay is a supplemental compensation measure that aims to show the actual economic value an executive has accumulated from their compensation, as opposed to the grant-date fair values reported in the Summary Compensation Table. While the SCT reports stock awards and option awards at their fair value on the date of grant — using financial models like Black-Scholes — realizable pay recalculates these values based on the current (or period-end) stock price and actual vesting outcomes. This distinction matters because the grant-date value and the ultimate realized value can differ dramatically. For example, a CEO might receive a stock option grant valued at $5 million on the grant date, but if the stock price subsequently doubles, the realizable value could be $15 million or more. Conversely, if the stock declines, the same grant could have a realizable value of zero. Companies increasingly present realizable pay analysis in their proxy statements alongside the SCT total, arguing that it provides a more accurate picture of the pay-for-performance relationship. A CEO whose realizable pay is lower than the SCT total has experienced stock price declines that reduced the value of their equity, while a CEO whose realizable pay exceeds the SCT total has benefited from stock price appreciation. Proxy advisory firms and institutional investors use realizable pay as one of several lenses for evaluating pay-for-performance alignment. The SEC's pay-versus-performance disclosure, which requires reporting of "compensation actually paid," is conceptually similar to realizable pay and has formalized this approach in the regulatory framework.