Who Approves CEO Pay?

Approval of CEO compensation packages varies by both company revenue and ownership type, according to Chief Executive’s CEO & Senior Compensation Report 2017.

Here we look at who’s in the driver’s seat when it comes to the CEO’s paycheck at private companies with revenue ranging from less than $2 million to more than $1 billion.

As the chart shows, at 54% of the smallest companies, the CEOs themselves determine their own compensation, with boards, partners and parent companies making the calls in other cases. For $1 billion-plus enterprises, however, boards are firmly in control, approving 90% of all pay packages.

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Generally speaking, the survey found that the larger the company as measured by revenue, the greater the role the board plays in setting compensation. In the $2 million to
$4.9 million range, the board makes the call at 46% of companies, while in the $50 million to $99.9 million range, the board weighs in 58% of the time.

And for companies with $250 million to $499.9 million and $500 million to $999.9 million in revenue, the board determines CEO pay 67% and 79% of the time, respectively.