Welcome

In the July 2008 edition of Executive Compensation Trends, our first article compares the pay of chief executives promoted from within an organization to the pay of chief executives hired externally. As the Wall Street Journal notes in a review of our study, entitled: Hiring a CEO from the Outside is More Expensive, companies of all sizes continue to pay a significant premium for outside CEO talent. In our second study, we shift to CEO performance metrics and explore which metrics are most prevalent for cash and equity incentive plans.

Feature Articles

CEO New Hire Compensation
An analysis of new hires at S&P 1500 companies

An Equilar analysis of compensation trends for newly hired chief executives at S&P 1500 companies reveals the following key findings:

• In 2007, externally hired CEOs at Large Cap companies received a median pay package that was 51.1 percent larger than the median pay package for CEOs in place for at least two years. In contrast, internally promoted CEOs at Large Cap firms made 14.2 less than CEOs in place for at least two years.
• Although internally promoted CEOs made less than other CEOs in their first year, they usually enjoyed a significant boost in pay. For example, at Large Cap companies, median pay for internally promoted CEOs rose by 82.9 percent over the year before their promotion.
• Throughout the S&P 1500 index, the majority of internally promoted CEOs held the chief operating officer position in the year before their promotion to CEO. This percentage was highest among Mid Cap companies, where 70.0 percent of internally promoted CEOs where COO before their promotion.

CEO Performance Metrics
An analysis of incentive plan metrics at S&P 500 companies

An Equilar analysis of performance metrics for chief executives at S&P 500 companies reveals the following key findings:

• In 2007, among the 91.2 percent of S&P 500 CEOs with an annual cash incentive plan in place, 58.4 percent measured some or all performance using EPS/Net Income.
• 54.9 percent of S&P 500 CEOs participated in an equity incentive plan in 2007. Like cash plans, EPS/Net Income was the most common metric used to judge performance.

Equilar in the News

Research and commentary from Equilar appeared in several articles in late June and July. To read more about the latest in compensation news, click on the links below. For a complete list of articles featuring Equilar research, visit the news and publications section of our website.

Hiring a CEO From the Outside Is More Expensive July 28, 2008
"Executive-pay tracker Equilar Inc. found that external hires in 2007 and early 2008 received median compensation of $6.6 million, 65% more than the median $4 million for internally promoted CEOs. The compensation figure includes salary, cash bonuses and equity incentives."
Financial Industry's Leaders Among Best Paid in Region July 28, 2008
"On average, the 100 highest-paid executives received $6.6 million, according to The Post examination. Data were provided by Equilar, an executive compensation research firm in Redwood Shores, Calif. The big factor in getting on the top-100 list was bonuses. Ninety-eight percent of the executives on the list received a bonus averaging $1.47 million."
CMOs Snag an Average of $1.5 Million a Year July 28, 2008
"Mr. Jarvis was lured to Dell last year with a package including a $3 million 'new-hire long-term cash award' and use of a jet to commute between his house in California and Dell offices in Texas. He tops the list of CMOs in a salary survey produced for Ad Age by Equilar, an executive-compensation research firm that analyzes proxy statements and other filings of public companies."
Add Real Estate to Companies' Exec Perks List July 7, 2008
"In 2007, 25.3 percent of Fortune 100 companies disclosed relocation benefits for CEOs, with a median value of $27,000 for the perk, according to executive compensation research firm Equilar. Also, 7.4 percent of Fortune 100 companies disclosed housing or apartment allowances for CEOs, with that perk carrying a median value of $67,671."
Pay and Performance: The View From the Top June 26, 2008
"For the 100 largest Philadelphia-area companies, median CEO pay increased 10.9 percent in 2007, according to data newly compiled for The Inquirer by Equilar Inc., an executive-compensation research firm."