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E-MailJoyce Chen is an Associate Editor at Equilar, Inc. This post is based on an Equilar memorandum by Ms. Chen and Andrew Gordon.
Tariffs imposed by the Trump administration in 2025 introduced a new layer of uncertainty for U.S. companies already navigating a fragile macroeconomic environment. The measures apply to imports from most global trading partners across a wide range of tariff rates, shifting constantly in response to negotiations, policy changes and foreign retaliation. During the 2026 proxy season, this uncertainty influenced how companies evaluated executive compensation programs, with many organizations addressing tariff-related impacts in their proxy statements, particularly when determining performance goals and pay outcomes.
This Equilar analysis examines U.S. public companies that disclosed tariff-related impacts during the 2026 proxy season.
Caleres, Inc. (CAL)
Caleres indicated that ongoing geopolitical uncertainty and changes in U.S. trade policy, including tariffs, limited its ability to reliably project long-term financial performance. In response, the compensation committee opted to set financial targets on a year-by-year basis for the 2025–2027 long-term incentive plan, rather than establishing multi-year goals upfront. The plan also includes a separate component tied to strategic initiatives, which will be evaluated over the full performance period.
Axon Enterprise, Inc. (AXON)
Axon adjusted its performance evaluation for 2025 cash incentives by excluding the effects of newly introduced tariffs from the adjusted EBITDA margin. The Company indicated that this modification was intended to ensure that incentive outcomes reflected underlying business performance, consistent with how the original metrics were designed.
The Children’s Place, Inc. (PLCE)
The Children’s Place highlighted how tariffs are shaping compensation decisions in the 2026 proxy season. The human capital & compensation committee (HC&C) did not set performance metrics in the first half of fiscal 2025 due to unpredictable macroeconomic conditions and leadership transitions. Performance metrics were established in the second half of 2025, though targets were not met. The HC&C noted that performance was impacted by external factors outside management’s control, including tariffs and other economic pressures.
As a result, the committee placed greater emphasis on how management responded to these challenges, rather than strictly on financial performance. Ultimately, the committee awarded bonuses to the NEOs (other than the CEO) based on those discretionary assessments of management’s performance.
MGP Ingredients, Inc. (MGPI)
In MGP Ingredients’ 2026 proxy statement, the compensation committee exercised discretion under its STI plan to modify performance results for 2025 related to tariff impacts. Specifically, the committee approved adjustments to key financial metrics, including adjusted operating income, adjusted EBITDA and adjusted basic EPS, to account for tariff impacts that were not reasonably predictable when targets were originally set.
Ross Stores, Inc. (ROST)
In response to the heightened uncertainty from volatile macroeconomic and tariff conditions, Ross Stores’ compensation committee broadened performance ranges and revised payout schedules, while maintaining its longstanding formula-driven structure. To prevent tariff-related costs from distorting results, the committee also introduced specific cost factors to isolate these impacts in performance evaluations.
Tariff costs ultimately reduced adjusted pre-tax earnings by approximately 2%, which was less than initially anticipated. As a result, incentive payouts for annual cash bonuses and performance share awards were largely in line with what would have been delivered under the prior year’s payout structure without tariff-related adjustments.
The backdrop of challenging and variable macroeconomic conditions reduced visibility into expected performance for the year, leading the Committee to carefully consider how to set challenging and appropriate performance goals for the fiscal 2025 executive compensation programs. Ultimately, the Committee concluded that full-year performance goals should continue to be set early during the fiscal year and that adjusted pre-tax earnings remained the key driver of stockholder value. The Committee also recognized that there was a wider range of plausible outcomes than in a typical planning cycle, and considered a corresponding range of economic and tariff scenarios to determine performance expectations that were aligned with the Company’s operational objectives and consistent with conditions known at the time goals were set.
In response to this highly uncertain environment, the Committee adopted broader performance ranges and revised the payout schedules for the fiscal 2025 annual cash incentive bonuses and performance share awards, while maintaining a fully formulaic payout structure. In addition, given the potential for tariff-related costs to drive reported results in ways that might distort underlying business performance, the Committee also adopted a defined set of cost factors, designed to isolate tariff-related costs when evaluating performance relative to the established incentive goals.
The Committee’s approach to incentive design for fiscal 2025 reaffirmed the importance of applying the Company’s longstanding, formula-driven approach in a manner that appropriately reflected the environment in which the Company was operating when goals were set. Consistent with prior years, the incentives were designed so that outcomes would reflect underlying operating performance and align with Company operational goals and objectives for creating stockholder value. Further detail is provided in “Setting Performance Metrics for Incentive Compensation” below.
At the end of the fiscal year, the impact of tariff-related costs reduced our adjusted pre-tax earnings results by around 2% and was less significant than originally anticipated. As a result, the actual payouts under our annual cash incentive bonus and performance share awards were generally consistent with the payouts that would have resulted under our fiscal 2024 payout schedules had the 2025 results not been adjusted for the tariff costs.
Integer Holdings Corporation (ITGR)
Integer Holdings’ compensation committee initially set 2025 STI-adjusted operating income targets and later adjusted them downward by $15 million to account for potential tariff impacts, while incorporating a framework to adjust payouts based on actual results. At year-end, the committee determined that tariffs did not materially affect the Company and applied negative discretion to reduce payouts to the level that would have been achieved without the tariff-related adjustment.
