Human Capital & Careers

CEOs Enjoyed Double-Digit Pay Gains

Survey finds that four company chiefs saw their pay rise by more than 1,000 percent.
Stephen TaubAugust 5, 2004

Happy days are apparently here again, at least when it comes to executive compensation. CEOs of companies in the S&P 500 surveyed by The Corporate Library saw their total pay rise by a median of 22.18 percent in 2003. For the 372 respondents, this was double the rise the group enjoyed the prior year, according to the corporate governance research firm.

The surge in compensation was driven by the exercise of stock options, thanks to the recovering stock market or the award of restricted stock. The research group also noted that CEOs at four companies racked up gains that exceeded more than 1,000 percent–Oracle, Apple Computers, Yahoo, and Colgate-Palmolive.

The survey also underscores the notion that a company’s size matters when it comes to compensation. Total pay for all CEOs at 1,429 public companies sampled by the group rose by a median of only 15 percent. Still, even that figure surpassed the 9.5 percent gain for all CEO compensation in 2002.

The Corporate Library noted that virtually every single element of pay rose in value in 2003 — base salary, annual bonuses, total annual compensation, restricted stock, long-term incentive payouts and the value realized from the exercise of stock options. The only payment that did not increase was the value of stock-option grants. That’s not surprising, since option grants have been declining in popularity in favor of restricted stock and other compensation vehicles.

The best companies to work for—if you were a chief executive—were in the telecommunications and securities and commodities industries, each with median total compensation levels of around $8 million, according to the report.

The double-digit pay increases enjoyed by CEOs differ sharply from the experience of rank-and-file workers. Last year, salary increase budgets fell to their historic lows, according to the recently released annual WorldatWork Salary Budget Survey. The 2,774 respondents employed in the compensation and benefits departments of mostly large companies in North America reported a salary budget increase of 3.5 percent for 2004, in line with last year, and 3.7 percent for 2005.