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22 Mar, 2012

U.S. CEO Pay Up +7% In 2011 Among Early Filers


NEW YORK, March 20, 2012 /PRNewswire/ — In 2011 median net income increased +17%, while median CEO total compensation only rose +7%, primarily due to a +9% increase in long-term incentive awards. Base salaries increased +3% and bonuses were flat year over year.

These findings are based on a study of 100 early filers with revenues greater than $1 billion recently completed by executive compensation consultancy Steven Hall & Partners. For the companies in this group, at median, revenues increased +11% and stock price performance for the year was flat.

Pay continues to be predominantly incentive based. For the 100 CEOs in the study group, long-term incentive compensation comprised 55% of total compensation, bonuses represented 25% and base salaries just 20% of total compensation.

“These early results suggest that companies continue to place great importance on their long term results and aligning the interests of their CEOs with those of shareholders,” said Nora McCord, Managing Director of Steven Hall & Partners. “Among the studied companies, long term awards increased in all but two industries in 2011, with many industries seeing double digit increases. But these increases aren’t guaranteed. The value ultimately realized by the CEO is dependent on stock price appreciation and the achievement of certain performance hurdles over the next few years.”

The study also demonstrates that CEO bonuses are aligned with operational performance. Annual bonuses were down -17% among companies with decreased profits in 2011. “Boards are committed to paying for performance and this bonus reduction shows they continue to hold executives accountable when performance falls short,” said Michael Sherry, also of Steven Hall & Partners.

Trends in Pay Elements

Among the 100 CEOs in the study group, the study finds that at median:

  •  Salaries increased +3%
  • Bonuses were flat
  • Long-term incentives (defined as equity awards and cash long-term incentive payments) increased by +9%
  • Total compensation increased +7%

Among the same companies over the same period, at median:

  • Revenues were up by +11%
  • Net Income was up by +17%
  • Total shareholder return was flat

The study analyzed compensation data as disclosed in preliminary or definitive proxy statements filed in 2012 for 100 companies with revenues greater than $1 billion who had CEOs with a minimum tenure of two years.  For more information, please visit www.shallpartners.com.