The Advisors' Blog

– Bill Gerek, Hay Group

Hay Group recently partnered with The Wall Street Journal to conduct its annual CEO study, examining CEO compensation at companies with more than $5 billion in annual revenue that had filed their proxies by the end of March. Not surprisingly, for the first time in many years, CEO compensation levels declined. Here are a few of the findings:

– Salaries were up 4.5% at the median
– Bonuses were down nearly 11%
– Cash compensation fell 8.5%
– Long-term incentive values were unchanged (median $5.3 million)
– Total direct compensation (which includes the value of LTI grants) fell 3.4% to a median of $7.6 million
– One year median TSR (total shareholder return) was -31.8%

For the second year in a row, performance-based LTI plans are the most prevalent long-term incentive vehicle (73% of companies have them vs. 72% using stock options). The use of a portfolio of equity vehicles continues to be very common – 71% of companies used more than one LTI vehicle and 24% used a mix of stock options, performance-based awards, and restricted stock.