CEO total compensation among 100 early proxy filers grew 7% in 2013 to a median $6.7 million, according to a study released on April 4 by Steven Hall & Partners. The study was based on 100 companies with revenues greater than $1 billion.
- Median net income was up 8%. Median base salary was $988,000, up 3%.
- Bonus payouts, a barometer of annual performance, increased 4% to a median $1.4 million.
- Long-term incentive awards increased 5% to a median $3.9 million.
“This isn’t surprising or inappropriate,” commented Nora McCord, a managing director of Steven Hall & Partners. “Long-term pay is designed to incentivize future performance. Over time, if company performance improves, these awards will increase in value. Alternatively, if performance is stagnant or declines, rewards can drop below their targeted values or plummet to zero.”
Year over year changes in long-term incentive values, which include stock options, restricted stock, performance shares, and long-term cash incentive payouts, were not directly correlated with annual changes in profitability or shareholder return. Long-term incentive increases were observed at companies with both increased and decreased profits, as well as companies with positive and negative total shareholder return (TSR).
Among the 100 companies in the study, at median
- Revenues were up 5% over 2012
- Net income was up 8%
- Total shareholder return (TSR) was up 32%
Trends in Pay Mix
Average CEO pay mix was unchanged in 2013 from 2012. As a percentage of total pay
- Salary represents 18%
- Annual incentives represent 24%
- Long-term incentives represent 58%