May 6, 2009
Is Pay Going Down? Or Up?
– Broc Romanek, CompensationStandards.com
In what I believe is a reflection of the sheer complexity of executive pay packages, a number of well-respected compensation consultants differ on whether executive pay levels went up or down last year. If the experts can’t even agree on something as basic as whether pay is up or down, I am dubious that boards can fully understand how all the various complex components that make up most pay packages work together. Over the past few decades, the area of executive compensation has become rocket science!
Recently, Bill Gerek of the Hay Group blogged about pay appearing to be going down, according to their joint survey with the WSJ. Jim McRitchie recently posted notes from a panel that dissected this survey.
In comparison, Bud Crystal recently wrote this article about how executive pay levels are going up. Similarly, a preliminary analysis by The Corporate Library suggests that generous incentive compensation will drive an increase in total CEO compensation in 2008 (it’s the April 7th report).
In addition, a recent Financial Executives International survey on CFO compensation – which interviews the executives themselves – revealed that 31% of financial executives didn’t receive a salary increase in 2008 – and an estimated average base salary increase of all respondents of 3.7% (which was down a percentage point compared to the previous year – but still amazing that salaries went up and not down! – while 94% of survey respondents reported receiving a 2008 bonus. Here is FEI’s press release regarding the survey. Note how they emphazize “no salary increase for one-third” – the real headline should be “two-thirds still got salary bump despite crap economy”…