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S&P 500 CEO Pay Rises 1.3% to $8.8 Million in Equilar® Study
For Release: April 10, 2008
Redwood Shores, Calif. - Equilar, the market leader for executive compensation benchmarking solutions, today published a preliminary analysis of S&P 500 compensation trends. The study, covering 233 S&P 500 chief executive officers in place for at least two years, finds that median CEO pay increased by 1.3 percent 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 percent from 2005 to 2006.
Declines in annual performance-based bonuses and stock option awards contributed to the slowing rate of growth in median CEO pay levels. Additional key findings from Equilar's study are outlined below:
Total Compensation
From 2006 to 2007, median compensation for S&P 500 chief executives in place for at least two years increased by 1.3 percent, rising to $8,828,589. In 2006, median pay for the same group of S&P 500 chiefs was $8,712,323.
Despite an increase in median compensation, aggregate compensation (the sum of all pay to all chief executives) fell by 1.9 percent from 2006 to 2007.
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.
Base Salary
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.
Bonuses
In 2007, S&P 500 chief executives received a median aggregate bonus of $1,837,080, down 4.9 percent from the median of $1,931,673 reported in 2006. Additionally, the prevalence of CEOs receiving bonus compensation fell from 96.6 percent in 2006 to 88.4 percent in 2007. As a result, aggregate bonus compensation for all S&P 500 CEOs declined by 4.7 percent 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:
Discretionary Bonuses
Among S&P 500 chief executives receiving discretionary bonuses, the median value of payouts increased by 1.8 percent from 2006 to 2007. Meanwhile, the prevalence of discretionary payouts was flat at 18.7 percent 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. This amount was 4.5 percent less than the median annual cash bonus of $1,616,000 in 2006. Additionally, the prevalence of annual cash bonuses fell from 85.5 percent in 2006 to 78.2 percent in 2007. Annual cash bonuses represent payouts which 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 percent from 2006 to 2007, climbing to a median of $1,988,929 in 2007, versus $1,770,450 in 2006. The prevalence of long-term cash bonuses was also up, moving from 16.1 percent in 2006 to 16.6 percent in 2007. Long-term cash bonuses represent payouts which are tied to long-term performance goals, typically covering a three to five year period.
Stock Awards
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 percent over the median grant of $2,243,475 in 2006. The prevalence of chief executives receiving stock awards increased from 76.7 percent to 78.2 percent.
Option Awards
From 2006 to 2007, the median value of S&P 500 chief executive option awards declined by 0.7 percent, falling from $2,294,059 to $2,278,672. Furthermore, the prevalence of option awards fell from 76.4 percent in 2006 to 71.2 percent 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.
Other Compensation
The median value of other compensation for chief executives at S&P 500 companies was $180,094 in 2007, a 0.9 percent increase over the median of 178,492 in 2006.
Pension Benefits
In 2007, for companies with consecutive years of data under the 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 percent over the median of $4,716,206 in 2006. The prevalence of chief executives with accumulated pension benefits was flat, remaining at 77.7 percent in both years.
Deferred Compensation
For companies with consecutive years of data under the new SEC disclosure rules, the median value deferred compensation plan balances increased by 54.3 percent 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 percent in 2006 to 83.4 percent in 2007.
To learn more about these findings, please visit www.equilar.com or call 1-877-441-6090.
About Equilar, Inc.
Equilar, a NASDAQ strategic alliance partner, is the market leader for benchmarking executive and director compensation. Equilar enables corporations, consulting firms, law firms, investors, individual executives, and members of the media to accurately compare pay packages across public companies using SEC data. Equilar's products include an award-winning suite of online tools for analyzing compensation and corporate governance trends and independent custom research services. Equilar's research is frequently featured in Bloomberg, BusinessWeek, CNBC, The Financial Times, Fortune, The New York Times, Reuters, The Wall Street Journal and other leading media publications. Equilar is based in Redwood Shores, CA and was recently recognized by Inc. magazine as one of the fastest growing businesses in America.
Media Contact
Alexander Cwirko-Godycki
(650) 286-4567
press@equilar.com
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