The CEOs of the largest U.S. public companies earned bigger pay in their latest fiscal year, as stock prices recovered and profits soared amid the country’s slow emergence from the recession. At these 456 companies, the median pretax value of CEO salaries, bonuses and long-term incentives, such as grants of stock and stock options, rose by 3 percent to $7.23 million, according to an analysis of proxy filings for The Wall Street Journal by consulting firm Hay Group.
But when considering CEO pay, base salaries are just part of the picture. Annual bonuses rose nearly 11 percent in the latest study to a median of $1.67 million, compared with a 3.4 percent rise in the initial analysis in April. About 53 percent of the CEOs got restricted-stock grants, up from about 48 percent in the April study.
Overall, median total direct compensation for CEOs in the sample rose 3.0 percent during their latest fiscal year, as total shareholder return came in at 29 percent. Total direct compensation includes salary, bonuses and the awarded value of stock, options and other long-term incentives. The gains were driven by higher company share prices and annual bonuses.
For example, Liberty’s total shareholder return for 2009 at 247 percent was the highest among the top ten. The measure includes gains in the stock price plus reinvested dividends.
As reward for his leadership in making the company profitable, Gregory B. Maffei, leader of Liberty Media Corp., had total direct pre-tax compensation of $87.1 million last year, four times his 2008 package and enough to land him atop the rankings.
CE Editor’s Opinion: While the call against excessive CEO compensation will surely rise again, we think most CEOs are fairly compensated. As in most things in life, stars create tremendous value and should be paid much more than average players. Few complain about the pay packages of movie stars or sports stars. If anything, the value great CEOs create is more tangible and measurable and has more of a positive impact on the economy; strong CEO performance ultimately leads to capital investment and job creation. Greg Maffei, the CEO of Liberty Media who took home $87.1 million last year, created shareholder value many times greater than what he was paid. It was a good deal for his shareholders. And even though the vast majority of CEOs don’t make these types of packages, it’s encouraging to know that those at the top of our game get paid like sports stars. We have a much tougher job.
For more from The Wall Street Journal about CEO pay and the list of the highest paid CEOs, please click here.