An analysis of company-selected compensation peer groups at S&P 500 companies reveals some clear favorites. 3M Co. tops the list, selected as a peer by 11% of the 374 companies that disclosed in their 2009 annual proxy statements a peer group of up to 35 companies. Six other firms – Johnson & Johnson, General Mills Inc., Procter & Gamble Co., PepsiCo Inc., Colgate-Palmolive Co. and Kellogg Co. – were among the most popular, identified as a peer in 9% or more of the named peer groups.

The selection of these relatively large companies as peers is not surprising, given the breadth of their operations – five of the top seven are consumer staples, and 3M is an industrial conglomerate. Only about a quarter of the companies that use 3M as a peer, however, share the same industry sector (using the Global Industry Classification Standard (GICS) developed by Standard & Poor's and Morgan Stanley Capital International). This low industry match is also evident for companies that have chosen Johnson & Johnson and Proctor & Gamble as pay peers.

Although PGI’s pay-for-performance analysis of these firms does not suggest egregious pay practices, CEO compensation at these firms generally exceeds $10 million per year. In terms of benchmarking, this could support increasing pay levels.

Interestingly, more than a quarter of the S&P 500 companies either did not name their peer group for the year, used an industry index group, or used a large, multi-sector survey by a compensation consultant.