CEO Cash Compensation Continues to Rise

October 9, 2003 ( - On the back of a cash compensation rise, median chief executive officer (CEO) total direct compensation increased 5.2%, to $6.99 million, in the first half of 2003.

CEO median total cash compensation – base salary and bonus – increased to $1.61 million between January and June 2003, representing a 10.5%-increase over the 2002 level of $1.46 million (SeeCEO Cash Pay Jumps, Stock Options Drop ) . Per the individual components of the compensation measure, the median base salary increased 4.3% to $886,219 and the median cash bonus increased 26% to $605,000, according to Equilar’s bi-annual survey of S&P 500 CEO Total Direct Compensation.

The dramatic increase in cash bonus levels was due in part to the number of chief executives receiving a payout. More than three-quarters (75.4%) of CEOs received a bonus in the 2003 measurable period, compared to 72.5% in 2002.

Declining 17.7%, to $4.67 million, during the same time period was the median value of long-term incentives (LTIs) – stock option grants, restricted stock awards and long-term incentive plan (LTIP) payouts. The median grant date present value of stock option grants –calculated using the Black-Scholes method –fell 27.5% to $3.98 million. Executives also saw smaller option grants, with a median award of 300,000 options as compared to 322,000 options in 2002. The percentage of CEOs receiving option grants remained relatively constant at 79.7%.

Increasing among LTI components was the median value of restricted stock awards, up 73% to $2.31 million during the first half of 2003. The percentage of CEOs receiving restricted stock awards rose to 24.6%, from 21.7% in 2002.

The study relied on information from annual proxy filings for 69 companies in the S&P 500 index with fiscal years ending between January 2003 and June 2003.