Total direct compensation for chief executive officers in the US fell last year, marking a sharp slowdown from double-digit increases two years earlier, a study by Compensation Advisory Partners (CAP) shows.
Total direct compensation for CEOs declined 0.3 percent from 2011 to 2012, after rising 3.6 percent from 2010 to 2011 and 14.4 percent from 2009 to 2010, according to CAP’s study of 62 US public companies, excluding financial services firms.
Salaries for US CEOs increased by a median of 0.5 percent from 2011 to 2012, slowing from 1.8 percent a year earlier and 1 percent from 2009 to 2010, the study shows. Only 53 percent of chief executives received any salary rise from 2011 to 2012.
Annual bonuses for chief executives, meanwhile, dropped 2.8 percent in the latest compensation period after registering zero change in the year-earlier period, and an increase of 19 percent from 2009 to 2010, says CAP. Long-term incentives remained unchanged from 2011 to 2012, having increased 10 percent in the year-earlier period and 10.1 percent in the period before that.
The increases for CEOs were outstripped by gains in compensation for chief financial officers, though CFO compensation also showed a slowing trend. Annual total direct compensation for CFOs rose 1.4 percent from 2011 to 2012, slower than the 7.5 percent median increase a year earlier. CFO salaries rose 3 percent while actual bonuses dropped 1.2 percent and growth in long-term incentives slowed to 2 percent from 10.3 percent.
‘As companies and boards focus on the alignment between pay and performance, and the economic recovery continues at a slow pace, it is not surprising pay increases have slowed over the last three years,’ the study authors write. ‘We expect future changes in compensation for these positions to continue to be closely linked to overall company performance, as well as stock price performance, as the majority of pay for CEOs and CFOs is delivered through long-term incentives.’
