Watson Wyatt’s latest executive compensation study of CEOs at more than 1,350 large publicly-traded companies, found that almost three-quarters of CEOs’ pay fell during 2000. Only a small group who had exercised options in 2000 saw a big gain, according to Watson Wyatt.
That’s not all. When 2001 payroll data is available, Watson Wyatt researchers said they expect it to show a further compensation decline and would represent the first time in more than 15 years when executive pay dropped two years in a row.
The study also found that shareholder returns were significantly higher in companies with higher levels of executive stock ownership.
Companies with high CEO ownership provided a 20.7% return to shareholders at the end of 2000 while companies with low ownership levels saw no return to shareholders.
Broader Management Pay Study
In a companion Survey of Top Management Compensation, Watson Wyatt examined executive pay levels and recent pay trends at more than 1,700 companies.
The study found:
- Companies paid their highest managers more in total cash compensation in 2001 (up 10.3%) than base salary (up 6.2%). Watson said that meant companies put greater weight on performance-based cash compensation.
- In 2001, 16% of all employees were eligible for stock options.
- The average grant value of stock options to CEOs increased to $4.3 million in 2001, from $4.0 million in the prior year.
- The percentage of companies with stock ownership guidelines for senior management has leveled off in the past few years, at about 26%.