Value of CEO Comp Drops Sharply in 2008

According to an analysis of proxy statements conducted by Watson Wyatt, the 80 CEOs that Watson Wyatt analyzed experienced an aggregate decrease of $13.4 billion in levels of realizable pay (measured here by annual bonuses paid plus value of company ownership plus value of outstanding equity awards) in 2008. A Watson Wyatt press release said the typical CEO saw a decline of $39 million or 53% in value for the year, with a drop in annual bonuses alone of 30%.

Shareholders saw a 40% loss on their investments and an overall loss of $2.23 trillion for the 80 companies, the press release said.

The 18 CEOs in the financial industry companies, the largest industry group in the analysis, collectively lost more than $3.1 billion in value, largely driven by decreases in the value of company ownership due to stock price declines in 2008, according to Watson Wyatt. The analysis also found that despite a moderate stock market rebound in recent months, the typical CEO lost an additional 21% in equity value in the first three months of 2009.

The Watson Wyatt analysis reviewed compensation levels for 2007 and 2008 at the first filers of the 20 largest companies with complete information available in each of six broad S&P industries, including health care, technology, consumer, materials/industrials, financial, and energy/utilities. Companies that were acquired or suffered bankruptcy during 2008 were included in the analysis.

CEO Compensations Drop Across Major Industries in 2008