In 2007, for companies with consecutive years of data under new SEC disclosure rules, the median value of accumulated pension benefits for S&P 500 chief executives was $6,106,986, an increase of 29.5% over the median of $4,716,206 in 2006. The prevalence of chief executives with accumulated pension benefits was flat, remaining at 77.7% in both years.
Equilar, a firm that provides executive compensation benchmarking solutions, has published a preliminary analysis of S&P 500 compensation trends that indicates median CEO pay increased by just 1.3% between 2006 and 2007. Of course, that meant that the median compensation for those executives was $8,828,589. In 2006, median pay for the same group of S&P 500 chiefs was $8,712,323. The study covered 233 S&P 500 chief executive officers in place for at least two years.
Aggregate Comp Drop
Despite an increase in median compensation, aggregate compensation (the sum of all pay to all chief executives) fell by 1.9% from 2006 to 2007.
Although not directly comparable, in a similar study conducted last year on 194 S&P 500 chief executives in place for two years, Equilar found that median CEO compensation increased by 6.0% from 2005 to 2006.
Total compensation includes base salary, discretionary bonuses, non-equity incentive plan payouts, the grant date value of stock awards, the grant date value of option awards, and other compensation. Stock awards include service-based and performance-based awards. Option awards include service-based awards, performance-based awards, and stock appreciation rights (SARs). Other compensation typically includes benefits and perquisites.
From 2006 to 2007, the median base salary for S&P 500 chief executives increased by 3.0 percent, rising from $1,000,000 to $1,030,000. Last year, S&P 500 chief executives received a median aggregate bonus of $1,837,080, down 4.9% from the 2006 median of $1,931,673. Additionally, the prevalence of CEOs receiving bonus compensation fell from 96.6% in 2006 to 88.4% last year. As a result, Equilar notes that aggregate bonus compensation for all S&P 500 CEOs declined by 4.7% from 2006 to 2007. Aggregate bonuses include discretionary awards, short-term non-equity incentive plan payouts (annual cash bonuses), and long-term non-equity incentive plan payouts (multi-year cash bonuses).
For companies disclosing two consecutive years of compensation data under the new SEC disclosure rules, the following sections provide detailed information on all types of bonus payouts:
Among S&P 500 chief executives receiving discretionary bonuses, the median value of payouts increased by 1.8% from 2006 to 2007. Meanwhile, the prevalence of discretionary payouts was flat at 18.7% in both years. The median discretionary bonus for 2007 was $1,300,000, versus $1,276,489 in 2006.
Annual Cash Bonuses
In 2007, S&P 500 chief executives received a median annual cash bonus of $1,544,000, down 4.5% from 2006 levels. Additionally, the prevalence of annual cash bonuses fell from 85.5% in 2006 to 78.2% last year. Annual cash bonuses represent payouts that are tied to short-term performance goals.
Long-Term Cash Bonuses
Among S&P 500 chief executives participating in long-term incentive plans, the median value of long-term cash bonuses rose by 12.3% from 2006, climbing to a median of $1,988,929 in 2007. The prevalence of long-term cash bonuses was also up, moving from 16.1% in 2006 to 16.6% last year. Long-term cash bonuses represent payouts that are tied to long-term performance goals, typically covering a three- to five-year period.
In 2007, chief executive officers at S&P 500 companies received stock awards with a median value of $2,493,895, an increase of 11.2%. The prevalence of chief executives receiving stock awards increased from 76.7% to 78.2%.
From 2006 to 2007, the median value of S&P 500 chief executive option awards declined by 0.7%, falling to $2,278,672. Furthermore, the prevalence of option awards fell from 76.4% in 2006 to 71.2% in 2007. This is the first year that both the median value and prevalence of CEO option awards were less than the median value and prevalence of stock awards.
The median value of other compensation for chief executives at S&P 500 companies was $180,094 in 2007, a 0.9% increase over the median of 178,492 in 2006.
For companies with consecutive years of data under the new SEC disclosure rules, the median value of deferred compensation plan balances increased by 54.3% from 2006 to 2007, climbing to a median value of $4,517,488. The prevalence of chief executives with deferred compensation balances increased from 82.9% in 2006 to 83.4% last year.
To learn more about these findings, please visitwww.equilar.com or call 1-877-441-6090.
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