How Much Does the Average CEO Really Earn?

Of the roughly 30 million businesses in the United States, less than 6,000 are publicly traded on major stock exchanges. As anyone who gets their information from mainstream news and media outlets well knows, the spotlight and analysis for business (especially in regard to CEO compensation) are firmly focused on S&P 500 companies. That means that virtually 100 percent of media coverage of CEO compensation focuses on less than 8 percent of all public companies and less than .002 percent of all companies in the U.S.

With this narrow and statistically insignificant scale in mind, how could the information disseminated about CEO compensation be meaningful? The plain truth is that it isn’t.

The reality of CEO compensation is drastically different from the coverage given by major media outlets in articles like, “Typical CEO made $9.6 million last year, AP study finds” and the USA Today’s “CEO pay rises again in 2011, while workers struggle to find work,” as well as The New York Times’ “C.E.O. Pay is Rising, Despite the Din.” The Associated Press report’s assertion that the “typical CEO” had a $9.6 million annual pay package in 2011 and the media’s portrayal of that finding as part of a trend of increased CEO compensation could not be farther from the truth.

For the second consecutive year, Chief Executive’s research division conducted the most comprehensive surveying and analysis of private company compensation in the U.S. for our annual CEO & Senior Executive Compensation Report for Private Companies. The data collected in this research from 1,101 private companies paint a starkly different picture from what is portrayed by mainstream media.

In 2011, the median private company CEO in our survey earned a total compensation package of $362,900. That is just 3.8 percent of the number reported as “typical” in the Associated Press study. For private companies with at least $1 billion in revenue, the median CEO compensation package totaled just under $1.7 million, which is still less than 18 percent of the AP figure.

Median compensation for private company CEOs is up only 1.9 percent from 2010’s $356,133. Despite over 70 percent of our respondents’ reporting increased revenue in 2011 versus the previous year and 90 percent of all of the companies we surveyed being profitable, private company CEO pay packages increased less than the rate of inflation (3.2 percent in 2011).

The median CEO did not accrue any equity appreciation over the last year or new in-the-money equity grants and had relatively unchanged pay in both base salary and bonus. This demonstrates the vast majority of CEOs’ willingness to adjust their own compensation to position their companies to survive during turbulent economic times.

Rather than outlandish and misaligned pay packages that benefit the CEO to the detriment of the company, its employees and shareholders, our research found quite the opposite as the standard practice at private companies in the U.S. CEO compensation is strongly and positively correlated with a company’s size, complexity (in terms of revenue and number of employees) and performance (that is, revenue growth and profitability). The median CEO among unprofitable companies did not receive a bonus in 2011.

CEOs are leaders who build businesses, create jobs and contribute to their communities; and by and large, they do each of these actions successfully. Mainstream media seems content to vilify and incriminate CEOs for their compensation to hype story lines about corporate greed, the out-of-touch nature of business leaders and the 99 percent versus the 1 percent. However, the reality is far different from that.

The results of our research clearly indicate that the vast majority of CEOs earn generous—yet fair—compensation and that private companies are responsive in their executive pay packages to macro conditions and individual business performance, yet the thesis parroted time and again by mainstream media does not reflect these realities.

The CEO & Senior Executive Compensation Report for Private Companies Report 2012-13 includes information on base salaries, bonuses, equity gains, benefits and perks, as well as how CEO and other senior executive compensation varies by company size, industry, type of ownership and geographic region. The full report can be found at