Cash is Not King – CEO Annual Pay Raises Hit New Low with Smallest Increase in 6 Years
— CEO Salaries and Bonuses Remain Flat —
— Boards Opt for Longer-Term Incentives —
— CEOs Face Increased Pressure to Meet Organizational Goals —
The study, which is conducted by the
Overall, total direct compensation increased 4.2 percent to
The smallest increase in the past 6 years in CEO annual salary growth corresponded to a relatively good total shareholder (TSR) return of 12 percent, compared to a TSR of 0.1 percent return in 2015. Total revenue was slightly up at 1.6 percent and net income growth among the companies was 2.6 percent.
“Compensation committees recognize the need to reward and retain
high-performing CEOs, but with more pressure on year-over-year financial
goals and increased scrutiny from governance watchdogs, investors and
the media, it’s hard for committees to justify increases in salaries and
The emphasis on performance awards as part of the long-term incentive mix increased to its highest level with performance awards accounting for 54.7 percent, followed by restricted stock at 22.7 percent and options at 22.6 percent.
“It’s an easy decision for Boards to reward CEOs with performance equity,” said Becker. “It incentivizes CEOs to focus on longer-term results and is a positive way to reward CEOs while aligning with shareholders’ interests and giving them confidence that the CEO is focusing on both current and future performance.”
The 2016 study focused on the primary elements of compensation for CEOs
of the 300 largest public companies by revenue to file their final
definitive proxy statements between
Note: all dollar figures are medians and are calculated independently. Medians should not be added to create another data point.