CEO Paychecks Headed Down in 2008

April 7, 2009 ( - Median CEO pay fell by 6.8% from 2007 to 2008 with overall compensation declines principally driven by a steep drop in median cash bonus payouts, which fell by 20.6% over the same period, according to a new study.

Executive compensation consulting firm Equilar said in a news release that aggregate compensation also fell, dropping by 8.9%. S&P 500 CEOs received a median total pay package of $8,446,935 in 2008, down from $9,061,057 the year before.

According to Equilar, the last significant drop in CEO compensation occurred between 2001 and 2002, when median S&P 500 CEO pay fell by 9.9%. Between 2002 and 2003, CEO pay was essentially flat (down 0.2%), and in each subsequent year until now, median compensation rose.

The median base salary for S&P 500 CEOs increased by 5.7% from 2007 to 2008, rising from a median of $1,000,000 to $1,057,118.

In 2008, S&P 500 CEOs received a median cash bonus of $1,473,520, down 20.6% from a median payout of $1,855,989 in 2007. The prevalence of CEOs receiving a bonus also dropped from 92.3% in 2007 to 85.6% in 2008.

Aggregate bonus compensation dropped by 19.6%, falling from approximately $579 million to $465.2 million, Equilar said. Equilar defines cash bonus payouts as the sum of any discretionary bonuses, annual incentive plan payouts, and long-term incentive plan payouts paid in cash.

Meanwhile, annual incentive plan payouts fell by 19.6% from 2007 to 2008. The median annual incentive plan payout in 2008 was $1,205,931.

In 2008, the median value of CEO stock awards at S&P 500 companies inched upward by 1.4%, rising from a median of $2,305,200 to a median of $2,336,327, Equilar said. The prevalence of CEOs receiving stock grants was nearly flat, but down slightly, falling from 77.4% in 2007 to 76.4% in 2008.

From 2007 to 2008, the value of S&P 500 CEO stock option grants rose by 3.6% to a median of $2,400,037. The median option grant in 2007 was valued at $2,316,099. The prevalence of CEOs receiving stock options was up by a small degree from 71.2% in 2007 to 73.6% in 2008, Equilar said.

Equilar defines total compensation as the sum of base salary, cash bonus payouts, the grant date value of stock awards, the grant date value of option awards and other compensation like benefits and perquisites. Bonuses include both discretionary and performance-based payouts. Stock and option awards include grants with both service-based and performance-based vesting requirements.

Equilar's study includes data for 208 S&P 500 CEOs at companies with fiscal years ending between June 2008 and January 2009. To be included in the study, a CEO must have been in place for at least two fiscal years.