Compensation for CEOs in the US rose by an average of 12.7 percent last year, mainly due to increases in the value of pension plans, according to a study by ISS Corporate Solutions, an arm of proxy advisory firm ISS.
A jump in the compensation category of ‘change in pension and non-qualified deferred earnings’, mostly spurred by actuarial increases in the value of executive pensions, accounts for almost half of the boost to CEO compensation, according to the study. Excluding the pension changes, the median increase in CEO pay in the US last year was 7.2 percent.
The study of the 1,211 companies on the Russell 3000 that reported financials by April 13 shows average CEO grant-date pay totaling $6.4 mn in 2014, compared with $5.5 mn in 2013. The study covers only CEOs who have been in their position for at least two years.
ISS Corporate Solutions, which carried out the study in conjunction with ExecComp Analytics, another ISS unit, does not give comparative figures for 2012-2013. But a study last year by the Associated Press and Equilar shows the median pay of S&P 500 CEOs climbed 8.8 percent in 2013 to $10.5 mn.
The ISS Corporate Solutions study shows that CEOs in the Connecticut area received the largest pay increases, with a median gain of 38.7 percent, followed by CEOs in the San Francisco area, who received increases of 19.5 percent. Denver-area CEOs lag their peers in other areas of the US with an average increase of 2.3 percent.
‘While the principal driver underlying [the 2014] increases is changes in pension value, which account for about half of the total year-over-year jump, other factors continue to influence executive compensation,’ says John Roe, head of advisory at ISS Corporate Solutions, in a press release. ‘Among firms that use equity compensation, the median grant-date value of stock awards – most of which were allocated in late 2013 or early 2014 – increased by 11.9 percent thanks in part to optimism resulting from strong 2013 stock market performance.’
