Analysis: American CEOs' pay rises 6%
Source: Agencies |
May 26, 2012, Saturday
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Print Edition
Print Edition
PROFITS at big United States companies broke records last year, and so did pay for CEOs.
The head of a typical public company made US$9.6 million in 2011, according to an analysis by The Associated Press using data from Equilar, an executive pay research firm.
That was up more than 6 percent from the previous year. The figure is also the highest since the AP began tracking executive compensation in 2006.
Companies trimmed cash bonuses but handed out more in stock awards. For shareholder activists who have long criticized CEO pay as exorbitant, that was a victory of sorts. That's because the stock awards are being tied more often to company performance. CEOs can't cash in the shares right away. They have to meet goals first, like boosting profit to a certain level.
The idea is to motivate CEOs to make sure a company does well and to tie their fortunes to the company's for the long term. For too long, activists say, CEOs have been richly rewarded no matter how a company has fared.
The corporate world is under a brighter, more uncomfortable spotlight than it was before the financial crisis struck in the fall of 2008.
Last year, a law gave shareholders the right to vote on whether they approve of the CEO's pay. The vote is nonbinding, but companies are keen to avoid an embarrassing "no."
"I think the boards were more easily shamed than we thought they were," said Stephen Davis, a shareholder expert at Yale University, referring to boards of directors, which set executive pay. In the past year, he said, "Shareholders found their voice."
The typical CEO got stock awards worth US$3.6 million in 2011, up 11 percent from the year before.
Cash bonuses fell about 7 percent, to US$2 million.
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