Trim the fat, right? That’s the adage nowadays for most corporations. Well, despite a measured rebound in corporate performance, a new report shows that CEOs of large companies aren’t reaping the benefit with increased salaries. Channel Insider takes a closer look.
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Profits Increase, CEO pay stays flat
Despite average profit increase of more than 20% and shareholder returns of more than 37%, executive compensations consultants Steven Hall & Partners took a look at some early filers with revenues of greater than $10 billion and found that CEO pay remained flat or shrunk in some industries in 2009.
Equity Grants in a Depressed Market
Feel bad for the fat cats? Not so fast. According to the firm, CEO pay increases were almost non-existent. Sure, pay stayed flat, but large equity grants given in a depressed market may spell a big win in the near future for CEOs.
Big Upside
“Most of their stock awards were granted in a depressed market, before the recent stock market recovery. They, like shareholders, have benefited from the recent upsurge in stock prices," said James Hughes, Managing Director of Steven Hall & Partners.
Lack of Profit means CEO pay cut
The study found that profitability is the key driver for CEO compensation. For those unprofitable companies in the study, CEO compensations decreased by an average of almost 20%, and increased by about 2% for profitable companies.
CEO Comp Breakdown
For the 76 CEOs in the study group, equity compensation made up 56% of total compensation, bonuses and other cash-based incentives, 24%, and base salaries, 20%.
Financial Services CEOs relying on Base
The financial services market got a bad rep for inflated bonuses over the past couple of years. In 2009, interestingly, CEOs at financial services companies received 23% of total compensation in base salary, the greatest portion among all industries analyzed.
The Big Boy Numbers
Of the $10 billion-plus companies analyzed, on average, revenues shrunk by 4%, net income rose 20% and the total shareholder return spiked by more than 37%, compared to the year before.
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