CEO pay growth has slowed, finds survey
A Reuters review has found that of the 46 S&P 500 companies that have disclosed CEO pay raises before March 11, the average median compensation increase only totals 1 percent.
March 19, 2014 at 07:24 AM
3 minute read
The original version of this story was published on Law.com
In 2012, the average median pay for a CEO in the S&P 500 rose a staggering 5.5 percent. For some select companies, the overall change was even higher. However, as 2013 disclosures begin to trickle in, it seems that CEO pay increases are beginning to slow down.
A Reuters review of regulatory disclosures has found that of the 46 S&P 500 companies that have disclosed CEO pay raises before March 11, the average median compensation increase only totals 1 percent. For these 46 companies, the media compensation was $8.64 million.
That represents a large change from last year's compensation increases for these companies. The 46 companies held a median pay increase of 15 percent in 2012, with the median pay sitting at $8.53 million.
According to Reuters, who conducted the survey for proxy adviser Institutional Shareholder Services, there could be a substantial change in the data as the rest of the S&P 500 companies make their CEO pay increases known within coming weeks. However, some pay experts were expecting to see slower CEO pay growth in 2013 due corporate profits that only rose by 6.2 percent during the year.
“They're not going to get monster rewards,” said Alan Johnson, managing director of pay consulting firm Johnson Associates in New York, to Reuters. “The indications are that companies continue to do a better job of matching up pay with performance.”
Perhaps interesting for in-house counsel is the shift in how these CEOs are being paid. While the median cash salary for these 46 CEOs only rose 2.6 percent, the median stock award rose 9.5 percent. Companies did not release as many stock option awards, however, as only 32 of the 46 companies awarded stock options to their CEO, down from 35 of those companies in 2012. Concerning the 35 companies who awarded stock options in 2012, total stock option award totals were down 23 percent in 2013.
Overall, said John Roe, ISS's executive director of corporate services, the small increases and payout shifts are indicative of important market trends. “For the companies in this sample, it was a year of compensation adjustments rather than increases.”
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