Study Shows Executive Comp Changes before Recession Impact

December 24, 2008 ( - A new report by the Conference Board indicates that "changes are underway" with CEO compensation in the U.S., even ahead of the dramatic alterations the group predicts will happen next year in light of the financial crisis.

Among the trends detected based on the Conference Board’s analysis of corporate proxy statements filed as of June 2008 covering fiscal year 2007 are:

  • Almost all industries show a reallocation of compensation towards stock and away from total cash compensation and stock options. In financial services (non-banks), for example, the average percent of total compensation delivered in non-equity incentives fell by 2.62% (from 24.19% to 21.57%).
  • Median cash compensation increased in more than two thirds of the industries studied (as did total compensation overall). The largest median gainer in cash compensation is insurance (up by 34.39% to $1,227,371). The only notable negative is construction with a 22.36% decrease.
  • Among the 22 industries represented, food and tobacco shows the highest median CEO total compensation. It tops the list with $6.34 million in median total compensation, and $2.7 million in median total cash compensation, followed by utilities, insurance, and financial services (non-banks).
  • Of the largest 10% of companies in the sample, the median CEO holds 99.97% of his/her salary in total stock and stock options holdings in the company. Across industries, the largest median multiple (94.44) is seen in the financial services industry (non-banks), the smallest is commercial banks (23.31).

Conference Board Research Director Linda Barrington said in a news release that corporate officers will have to assume their top executives’ compensation will come under greater scrutiny from both inside the outside the company, pointing out that the recession and the financial crisis has sparked an “eroding public trust in business leadership.”