Executive Chairmen: The Other Compensation Issue

The CEOs of public companies are scrutinized for their expensive pay packages. After these CEOs step down from their top [...]

September 29 2011 by ChiefExecutive.net


The CEOs of public companies are scrutinized for their expensive pay packages. After these CEOs step down from their top position, however, the public rarely gives a second thought to how they are compensated. Their compensation is still relevant, however, because a large number of former CEOs step out of the C-suite and into the advisory role of the executive chairman, according to a new article from The Wall Street Journal.

In 2010, the median pay package for an executive chairman was $3.75 million. Though it is a far cry from the exorbitant packages some current CEOs are seeing, a yearly payment of almost $4 million is nothing to scoff at.

For example, when Stanley Works took over Black & Decker Corp. in 2010, the CEO of Black & Decker, Nolan Archibald, took the position of executive chairman at Stanley Black & Decker Inc. The pay package that Archibald received upon becoming executive chairman may now be worth as much as $92 million by 2013.

Executive chairmen are getting as much as 60 percent of what CEOs are paid. And this is a common practice; the number of firms where CEOs stay on as executive chairman has more than doubled in the last three years. In 2008, 17 public company CEOs stepped down and into the role of executive chairman as compared to the 35 in the first three quarters of 2011. Steve Jobs will now be Apple’s executive chairman and Eric Schmidt will take the role at Google, for example.

Should executive chairman pay be regulated in the same way as CEO pay?

Just like executive chairmen, the compensation practices for private company CEOs receive very little attention. Chief Executive Group Research just released its CEO and Executive Compensation in Privately Held Companies Report 2011 which includes comprehensive data and best practices from over 1600 current CEO and senior executives at 789 companies. For more information, click here.

Read: When Former CEOs Hang Around