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Benefits October 30, 2007
CEO Pay Increases in Line with Market Performance
October 30, 2007 (PLANSPONSOR.com) - A ten-year
study of CEO pay and financial performance of The Dow Jones
Industrial Average by DolmatConnell & Partners, Inc., an
independent executive compensation consulting firm, found
that despite media reports of runaway CEO pay and excessive
compensation, increases in CEO pay in The Dow firms closely
mirror the financial performance of The Dow.
Reported by Rebecca Moore
According to a press release, the study found the median CEO base salary in 1997 was $1.1 million and actual total direct compensation was $7.81 million, while the median company revenue was $20.9 billion and net income was $2.3 billion. In 2006, the median base salary for CEOs of The Dow firms was $1.4 million and actual direct compensation was $19.9 million, while median revenue for the firms was $50.9 billion and net income was $5.4 billion.
DolmatConnell determined that CEO pay increases only slightly outpaced financial performance increases, the press release said.
“Overall, the study illustrates that the large increases in CEO pay over the past ten years have been driven by large increases in the size, profitability, and shareholder returns of the companies that CEOs run” said Jack Dolmat-Connell, President of DolmatConnell & Partners, in the press release. “CEO pay is not out of control. CEO pay rises and falls with company performance, and American companies in general have performed well in recent years.”
Data was compiled by DolmatConnell & Partners from SEC filings for the Dow from 1997 to 2006. A copy of the study can be obtained at www.DolmatConnell.com .