Median cash pay for chief executive officers (CEO) – base salary and bonus – grew to $2,029,500 from $1,750,000 in 2002. Most of this gain came a s bonuses leaped 20.4% to $1,064,099 from $883,944, and six out of 10 CEOs enjoyed lump sums last year. The median base salary increased to $950,000, up 3.1% from 2002, according to a study of 345 of the Standard & Poor’s 500 companies conducted by Equilar for Reuters.
However, the median value of long-term incentives – composed of options, restricted stock awards and long-term incentive plan payouts – fell nearly 10% from 2002 to $4,682,400. Thus, with a decline the overall value of all the different types of CEO pay last year slipped 1.2% to $6,871,470.
The drop in long-term incentive valuations was due to corporations beginning to replace stock options with other forms of equity-based compensation. The median value of option grants, using the Black-Scholes valuation method, tumbled 19.2% to $3,152,036. At the same time, CEOs receiving restricted stock awards saw the median value leap 38% to $1,978,102 in 2003. Also, the percentage of CEOs receiving restricted stock awards rose to 35.1% from 30.1% in 2002, according to Equilar.
For those CEOs receiving a payout from a long-term incentive plan, the median value of these payouts in 2003 increased by 60.7% to $1,458,605 in 2003. The percentage of CEOs receiving long-term incentive plan payouts increased to 28.1% in 2003 from 25.8% in 2002.