Christopher Calio, CEO of RTX, collected $27.7 million in compensation last year. That was his total after the $241.5 billion aerospace and defense giant’s board decided the trade war wouldn’t touch his bonus.
At its January 2025 board meeting, the compensation committee of RTX, formerly Raytheon, pre-authorized the removal of tariff impacts on business metrics related to Calio’s pay months before President Trump announced a set of sweeping Liberation Day tariffs on April 2, 2025 that upended global supply chains. The RTX comp committee said that the tariff-cost impact “should be neutralized” for determining annual bonus payouts because the tariffs were “externally imposed, unpredictable and unrelated to operational execution.”
Calio’s annual bonus hit $5.1 million, an 85% increase over the $2.76 million the company paid him the year before. How much of that growth was attributable to the tariff exclusion, RTX did not disclose.
Calio wasn’t the only one.
At Ross Stores, the compensation committee approved a similar adjustment on May 21, 2025, the proxy states, stripping tariff costs from calculations used to determine bonuses and long-term incentive payouts. CEO James Conroy collected $17.4 million.
At The Gap, the comp committee adjusted two metrics to account for “the impact of tariffs not considered when the company set its annual budget.” CEO Richard Dickson’s total pay was $17.2 million.
None of the three companies disclosed exactly how much the tariff protection was worth to executives, according to an exclusive analysis released on Wednesday by executive pay consulting firm Compensation Advisory Partners. CAP found that among 22 large public companies with significant tariff exposure, eight boards shielded executive pay from the tariff tumult. The analysis is based on proxy statements filed before April 17, 2026.
“We all know tariffs had an impact on a lot of U.S. companies with operations overseas, or supply chains overseas,” said Shaun Bisman, a co-author of the new CAP report. “Tariffs not only hit income statements, they hit incentive plan design as well.”
Among the 22 companies CAP reviewed, 11 did not mention tariffs in their proxy statements at all, including Amazon, CVS, Johnson & Johnson and Mattel. Of the remaining 11 that did address tariffs in proxy statements, eight made adjustments meant to minimize the hit to incentive plan payouts. Four of the eight—distiller MGP Ingredients, RTX, Ross Stores, and The Gap—did not disclose exactly how much the adjustments boosted executive payouts. Ford, PepsiCo, and Pfizer discussed the impact of tariffs on their businesses but did not protect executive pay plans from the cost.
At Ford, for instance, the automaker told investors it absorbed a $2 billion tariff impact to its adjusted EBIT, but didn’t exclude the cost from its incentive calculations, CAP found.
Margaret Engel, a partner at CAP and co-author of the analysis, said the largest companies, Ford included, were much better positioned to handle a major hit from tariffs.
“But as you get to smaller companies, it gets a lot more difficult,” said Engel. “There’s just less balance sheet strength, less cash flow reserves.”
Plus, the tariff timing was “horrendous” for companies, noted Engel. Many had already locked in their plans with vendors and customers and couldn’t just ratchet up prices overnight to offset the impact of a trade war.
Eye-Opening Results
Among the seven companies that made adjustments for tariffs and disclosed the dollar impact, the numbers are significant and in some cases made the difference between tepid payouts and millions of dollars.
Cooler and drinkware brand Yeti Holdings for instance used an adjusted operating income figure for the purposes of annual incentive pay calculations, adding $38 million to account for tariff costs and thereby lifting annual bonus payouts by 42.6%, CAP found. CEO Matthew Reintjes saw total compensation valued at $7.7 million, including a $1.1 million bonus.
The $38 million add-back was particularly important to Yeti executives since the company’s actual operating income of $269.8 million was below the $283.2 million threshold, which would have given execs a goose egg on the most important metric in the incentive pay formula. Yeti subsequently noted that it tweaked the weighting to 50-50 between operating income and net sales in its pay plan for next year.
Medical technology company Becton Dickinson’s compensation committee raised a performance factor from a calculated 74% to a final 85% of target, a boost of 10 percentage points attributed to tariffs among 11 percentage points total. The committee plucked out the unbudgeted impact of tariffs on adjusted EPS, operating margin, free cash flow, and gross margin, and separately credited management for navigating the tariff exposure. Chairman and CEO Thomas Polen’s total pay was $17.1 million and his bonus was $1.9 million.
Westinghouse Air Brake Technologies’s tariff adjustment increased bonus payouts from 178.1% to 192.8%, CAP found. CEO Rafael Santana’s total pay was $26.2 million and his bonus was $4.7 million.
Across the spectrum, increases to bonus payouts ranged from 6% to 43%, with a median of 13%, and an average increase of 12%.
An eighth company, hospital-supplies manufacturer ICU Medical, disclosed that it made an upward adjustment of 50% to the payout percentage of its long-term incentive, and 27.2% to its annual bonuses.
RTX, The Gap, Ross Stores Declined to Provide a Total
RTX, The Gap, and retailer Ross Stores told shareholders in their 2026 proxy statements that they modified how they measured executives’ performance to account for tariffs. However, none disclosed what the modification was worth in dollars.
Engel said that approach is out of step with what she would recommend.
“If you think about best practice disclosure, there is no doubt you should be specific about the impact,” said Engel. “Institutional shareholders, proxy advisory firms—they’re looking for specifics.”
Ross Stores disclosed that tariff-related costs “reduced adjusted pre-tax earnings by approximately 2%,” and that the damage was mostly contained to the second and third quarters. After extracting the tariff impact, the annual incentive paid out at 145.9% of target and performance share awards at 130.9% of target. Conroy’s cash bonus was $4.2 million but how much he might have earned without the adjustment was not disclosed.
The proxy states the payout was “generally consistent” with the plan, had it not been adjusted for tariff costs, which a spokesperson reiterated in an email.
Similarly, The Gap disclosed that it adjusted the percentage achieved in calculating annual bonus payouts for items not considered when goals were set, including tariffs, but did not include a dollar amount.
RTX made adjustments for its annual bonus and long-term incentive and did not disclose the amount, CAP found.
“I think it would be preferable to provide full disclosure, there’s no doubt,” said Engel. “And most of them did.”
‘It’s just a fairness issue.’
The rationale boards provided across the companies followed a consistent thread: incentive goals and budgets had been established prior to the unveiling of Trump’s tariffs and reciprocal tariffs. The scale and timing gave CEOs and executive teams very little time to respond before the damage hit financial results.
“Boards don’t want to penalize employees or executives for things that are outside their control,” said Engel. “It’s just a fairness issue.”
Bisman said the process is an ongoing discussion, not a single end-of-year determination.
“These are conversations that the management team and compensation committees are having throughout the year,” he said.
Boards often seek to avoid the spotlight entirely when it comes to executive pay plans and he said board members often try not to be in the minority of making adjustments if other companies aren’t doing the same thing. Bisman provides clients an update on how executives are tracking against their targets regularly. Around the third and fourth quarters of fiscal 2025, a lot of boards were asking Bisman what other comp committees were doing, he said.
The stakes around pay adjustments are high, and rise even higher below the C-suite level.
“That population’s probably relying on their cash compensation more so than the executives,” Bisman said. For an executive, “a lower bonus one year, that’s understandable, but deeper down in the organization, when they’re relying on the pay, you’re more likely to see adjustments.”
Companies aren’t required to disclose pay decisions for broader employee populations beyond their top-paid executives. Among the eight that made adjustments in CAP’s report, some applied them to broader employee populations. A spokesperson from Ross Stores told Fortune all eligible employees saw the same adjustment as the highest-paid executives as did employees at paper mill company Sylvamo whose bonuses were lifted 5.8%.
Integra Life Sciences Holdings, which adjusted bonus payouts by 13.3% to avoid a zero payout to executives, said the positive discretion applied for executives was “less than the general employee population” which Integra “believed was appropriate to recognize and reward resilience and continued focus on delivering to our customers and patients.” The remaining companies did not immediately respond to a request for comment.
Tariffs are gone. Now what?
The Supreme Court struck down Trump’s tariff program in February, ruling that they exceeded the administration’s authority under the law it used. Many companies have filed lawsuits seeking refunds and companies are contemplating the impact this would have on shareholders.
For compensation committees that excluded tariff costs from 2025 incentive calculations, those same costs could theoretically be returned in 2026 or 2027. Bisman said he wouldn’t be surprised to see companies that made upward adjustments to payouts making corresponding downward adjustments to lower bonus or long-term incentive pay if the refunds materialize and inflate metrics.
“You can’t only adjust upward,” said Bisman. “There should be situations where you’re adjusting downward for unforeseen circumstances.”
Engel agreed and noted most boards would pursue refunds regardless of political pressure. Trump has said he would “remember” companies that did not seek out refunds.
“I would expect most companies would seek refunds,” said Engel. “They have a fiduciary responsibility to their shareholders to maximize the financial results of the company.”
There’s also the Iran war to contend with. Like tariffs, many companies approved their 2026 incentive goals in February or early March—just before the Iran conflict sent oil prices surging and markets into turmoil. Bisman said comp committees are likely to have the same conversations all over again.
“I wouldn’t be surprised if you and I, in April 2027, are having a similar discussion on the impact of Iran and the price of oil, on incentive plan metrics,” he said. Bisman expects the impact will be more industry specific to oil and gas companies rather than the across-the-board shock of tariffs.
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