CEO Compensation Sneak Peek: Korn Ferry Analysis Finds Changing Mix of Long-Term Incentives, Aimed at Insulating Against Future Economic Volatility
– Total Direct Compensation for CEOs at Analyzed Companies Rises More than 15 Percent –
That according to an initial sample of the 12th Annual
Just in are results for the first 50 companies in the analysis.
Long-Term Incentives (LTIs) see double digit increases
- Total LTIs are up 11.2 percent
The mix of LTIs has shifted:
- Restricted stock (RS) accounts for 30 percent of mix, up from 26.1 percent the previous year
- Options are 23.8 percent of mix, down from 25.3 percent the previous year
- Performance equity is at 41.7 percent, down from 44.5 percent
- Performance cash has remained consistent at 4.5 percent
“These initial findings from the first 50 companies are telling. We are
seeing double digit increases in LTIs, which is the highest we’ve seen
since we began doing the study. What is especially interesting is how
and why the mix has shifted,” said
Overall, CEOs in the analyzed companies are being rewarded with robust compensation increases. Becker points to strong financial performance as one of the main reasons. Organizations in the sample saw an 8.1 percent increase in revenue and a 23.2 percent increase in net income.
Total direct compensation (TDC), which means annual cash compensation plus the annualized value of LTIs, is up 15.2 percent from the previous year. The increase in last year’s full sample was 8.7 percent.
CEO salary and short-term incentives (STIs) are up:
- Salary is up 2.3 percent
- STIs are up 8 percent
- Salary + STIs are up 6.9 percent
“No matter what happens to the market in the future, it’s clear that performance pays and boards will work to find the right mix of compensation for CEOs at profitable companies in order to motivate and reward them to stay,” said Becker.
The complete report, with a data analysis on all 300 companies in the index, will be available early-to-mid May.