According to New Equilar Report, CEO Performance Pay Grows With Market

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July 15 -- Chief executive officer compensation at the largest U.S. companies rose to $10.1 million in 2013, up from $9.3 million in 2012, as a result of a robust U.S. stock market, according to a new report by Equilar Inc.

The California-based executive compensation consulting firm's “CEO Pay Strategies Report” attributed the growth in CEO pay to the dominant role of stock awards--specifically, performance awards--whose value has increased in proportion to strong market performance.

For CEOs in the Standard & Poor's 500 index, 75.7 percent received performance-based equity grants, up from 71 percent in 2012, the report states.

Stock options as a portion of pay continued to shrink, however, constituting, on average, just 17.5 percent of the value of this group's 2013 pay package.

Median performance stock compensation for the S&P 500 CEOs increased by 7.3 percent in 2013, to more than $3.4 million, according to the report. Total compensation for this group, at the median, increased by 9.5 percent in 2013.

Realizable Pay.

The report also calculated realizable pay for CEOs in the S&P 1500 index using methodologies favored by proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. LLC, as well as The Conference Board's Working Group on Supplemental Pay Disclosures.

According to the report, realizable pay exceeded grant-date fair value pay in each calculation, with the ISS realizable pay definition resulting in the highest realizable pay values.

The report charts CEO compensation by company size, industry and pay component during the past five years, as well as CEO age distribution and gender.

Based on its findings, Equilar said that the ways in which CEOs are compensated has changed profoundly in order to meet greater demands for linkage between pay and performance , and for greater transparency.


Contact info@equilar.com or Aaron Boyd, director of governance research, at aboyd@equilar.com to obtain a copy of the report.