CEO compensation up 7.5% in 2007

[Amerigo Vespucci]

http://money.cnn.com/2008/12/09/news/economy/corporate_library_exec_comp/index.htm?postversion=2008120917

By Ben Rooney, CNNMoney.com staff writer
December 9, 2008: 5:12 PM ET

NEW YORK (CNNMoney.com) -- Overall compensation for the nation's top executives rose more than expected last year, but the rate of increase was the lowest in six years, according to a study released Tuesday.

The Corporate Library, an independent corporate governance group, said the median pay raise for the 1,864 executives who received one in 2007 was 7.5%. Total actual compensation for chief executives at 2,701 companies - including those with pay cuts or no change - was a median $2.05 million.

While the increase was larger than the 5.15% bump the group had forecast earlier this year, it marked the first time that CEO pay rises have shown a single-digit percentage change since 2001, when the Corporate Library first began tracking the data. At that time, the median increase was just under 10%.

The study showed that the increase in total actual compensation, which includes base salary, bonuses, perks and equity-based compensation, was due largely to value realized on stock options.

[Double T]

1. The swines have more intelligence then the filthy hogs occupying.........

the boardrooms on wall street. Executive compensation needs to be drastically capped through legislation, laws and oversight.

[exboyfil]

3. I am troubled about the government deciding how much

an individual should make. I think the role for the government is to ensure tax laws are in place to enhance fairness for everyone. The first thing I would do would be to tax stock options as soon as they are issued as regular income. I would do this by creating a comparable pool of options that would be widely traded on the open market. The option price in the open market is the assumed price for the option. The added benefit would be a slow down of stock options because of the fear of dilution.

Another way that the government can help is to ensure real time reporting of stock and option moves by highly compensated executives. An executive will have to state his/her intent and allow the market three days to react to that news. The same would apply to stock moves by immediate family members of these executives. That way regular investors can hit the door first before the executives.

The government should require that executive compensation contracts be published in special filings as soon as the deal is completed. I might even go so far to say that SEC rules require that top managers' compensation contracts be subject to a proxy vote???

I would like to see compensation boards get some teeth, and some of the institutional holders like Fidelity and Vanguard serve on these boards and ask questions about compensation especially when a new CEO is being hired. Once the contract is in place it is very difficult to do anything about it unless fraud or gross mismanagement is proven. Compensation boards might want to consider requiring that options only be exercised two years after a CEO has left the company???

Compensation boards need to get smarter about how to structure bonuses as well.

The business media has a role to play. As soon as new compensation contracts are signed, they should be reported in the news media and opened up to scrutiny and comment.

It is somewhat unfair to lump base salary with exercised options (so long as those options were awarded without backdating). The purpose of options is to encourage the CEO to manage in the best interests of the shareholders. Of course they don't always accomplish this goal as CEOs seek to hide material information long enough to exercise options.

Do other salaries need to be capped by the government as well? How about entertainers and sports stars? How about ex-Presidents and other officials that have left the government? At the end of the day shareholders decide what to pay executives. If they don't like it, then they can get out of the equity market. No doubt we have a problem when you compare U.S. CEO compensation to other nations.

[TomClash]

2. How to fail and get paid!

New bestseller by the Nation's "Top" CEOs!