Latest News on Executive Compensation

* * * Updated: July 29, 2010, 9:24 pm EDT * * *

COOs in Every Industry See Pay Declines

Having knocked out CEO and CFO pay, Equilar’s third report in the C-Suite lineup focuses on the S&P 1500′s Chief Operating Officers. While the median CEO and CFO saw their total pay fall between 2008 and 2009, no C-Suite group has taken a hit like that given to COOs, who saw their pay go down in every industry. Even in the Utilities industry, where they’re paid the most, COO pay was down about three percent. Companies seem to be addressing some of the damage by awarding bigger bonuses: the median bonus was up 14.5 percent in 2009, from $350K to $400K. But with more than a third (34.9 percent) not receiving any bonus at all, 2009 hasn’t been a banner year for a good chunk of the COO population.

In general, the COO data for 2009 was consistent with what we’ve seen for CEOs and CFOs: pay down, bonuses up, pay-for-performance fairly intact, and 2009 equity awards making up for the majority of 2008 equity awards that are still underwater. One odd change: unlike every other study, where the first and second quartile of COOs by company performance saw bonus leaps, the second quartile in the COO study actually saw its bonuses go down 7.8 percent, while the third quartile’s COOs saw bonuses that rose 20.5 percent. Sounds like a few companies need to show a little more bonus love to their stronger-than-average performers– and a few other companies need to show a little less love to below-average execs. To request the full COO report, click here.

CEO Perks Down, But Not Out

Reform-minded folk will be pleased at Equilar’s new data on CEO perks for the Fortune 100, which shows the median value of “other” compensation declining 28.3 percent from 2008 to 2009 (compare that to only a 2.3 percent drop from 2007 to 2008). The two most publicly reviled perks, tax gross-ups and personal use of corporate aircraft, were most likely to be cut; 34 percent of companies disclosed cutting at least one perk in ’09, and overall perk prevalence decreased five basis points in 2009.

But that doesn’t mean perks have completely disappeared. 50 percent of CEOs in the F100 still get gross-ups, and flexible perquisite accounts, which more or less shield a disbursement of “other” comp from targeted hatred, are on the rise (as is spending on security fees). 66 percent of CEOs still get to take rides on the corporate jet. All in all, the median perks package for a F100 CEO is still $249,632. The decline in perks may be a sign that Corporate America is listening, but that doesn’t necessarily mean they’re taking drastic action.

For S&P CFOs, Pay Is Down and Bonuses Are Up

Equilar has just released its 2009 pay reports for S&P 400 and 600 CFOs, completing the trifecta begun two weeks ago with the S&P 500 CFO pay study. The most interesting part of comparing the three groups is that cap size has a small effect on CEO pay cuts, but a big effect on bonus increases. To wit:

Pay Decrease for CFOs in 2009

• Large-cap: 3.1 percent ($2.675 million median total pay)
• Mid-cap: 2.7 percent ($1.399 million)
• Small-cap: 0.64 percent ($840,903)

Bonus Increases for CFOs in 2009

• Large-cap: 20.9 percent ($536,250 median bonus)
• Mid-cap: 14.8 percent ($280,000)
• Small-cap: 10.2 percent ($145,457)

See a trend? CFOs of large-cap companies may have taken the biggest total pay cuts (which still weren’t all that big), but they recouped much larger bonus increases as a reward. Were it not for those pesky 2008 option grants, salaries would be flying pretty high. What’s more, this trend also plays out with the upside-downside of good and bad performance: on a percentage scale, large-cap companies’ CFOs see bigger bonus increases when they perform the best and smaller bonus decreases when they perform the worst. Smaller S&P companies may be under less scrutiny, but they’ve somehow absorbed the “pay for performance” rhetoric more quickly than their large-cap counterparts.

S&P 500 CFOs vs. CEOs: Bigger Bonuses, Smaller Pay Drops

If one were to choose any executive hot seat in the S&P 500 right now, the Chief Financial Officer job might be the way to go. Though they make less overall than their counterparts in the CEO suite, CFOs have proven more resilient in terms of avoiding big pay drops and reaping bigger bonuses in these turbulent times. Equilar’s new study shows that CFOs’ median total pay only fell 3.1 percent (versus 7.9 percent for CEOs) while their bonuses jumped a jaw-dropping 20.9 percent (versus only an 8.5 percent boost for CEOs). The industries with well-paid CFOs include Conglomerates (the highest-paying, with median comp of $4.6 million) and Industrial Goods (which saw the biggest pay jump, rising 9 percent over 2008). Strangely, healthcare, the best-paying industry for small-, mid-, and large-cap CEOs, isn’t much of a hotspot for well-paid CFOs; total pay in that industry declined nearly 25% from 2008 to 2009.

CFOs are also benefiting from the same early-2009 stock grants given to their counterparts, where grant size was often inflated to make up for decreased stock price. Over 85 percent of those options are now in the money. To see all the data, request the report here.

Small-Cap CEOs: Lower Pay, Fewer Bonuses in ’09

The final chapter in Equilar’s cap-size CEO trilogy is out, and it looks like the CEOs of the smallest companies have taken some of the biggest hits. The S&P 600 is the only one of the three groups where bonuses were down in ’09– though median bonus value rose 3.3% for those who got bonuses, over 25% didn’t get any bonus, a 6.6% increase from 2008. Like the S&P 500, total pay is also down for the small-cap CEOs (the S&P 400 rose slightly), by 5.4%.

There’s also the question of stock: compared to their large- and mid-cap peers, small-cap CEOs are less likely to have options and more likely to have restricted stock. The share of their earnings that came in cash also shot up 8% between 2008 and 2009.

Ironically, the small-cap companies seem to be most enthusiastic about implementing the type of strictures to which the government would like to bring their big brothers around. In addition to the increased likelihood of restricted stock, bonuses correlate very strongly with performance for this group, with the top-performing quartile of companies raising CEO bonuses 71.1% and the bottom quartile docking them 32.6%.

You can get more information by requesting the full report here. If you’re interested in the S&P 500 and 400, go here and here.

S&P 400 CEOs: Slight Pay Bump, Big Bonus Bump

Unlike their counterparts in the S&P 500, who were lamenting a 7.9% slide in their median total pay last week, S&P 400 CEOs have something to be (relatively) happy about: their total pay rose slightly from 2008 to 2009, increasing 1.7% to a median of $3.76 million. They also saw a bonus bump of 11.6%, slightly higher than the S&P 500 bonus pop of 8.5%.

S&P 500 CEOs, however, do have one thing to crow about over their mid-cap peers: the CEOs of the 400 seem to get less money when they do well, and take a bigger hit when they do poorly. The top quartile of S&P 400 CEOs by company performance definitely got a nice reward, with a 66.7% bonus rise, but their peers in the bottom quartile took a hit of 32.6% in their bonus pay. Compare that to an upside of 86.8% and a downside of only 10.3% for S&P 500 CEOs in the same positions, and you have to admit that the air’s a bit nicer up in the large-cap leagues, even if you’re flailing. With Washington crying for blood, we have to admit surprise that the biggest CEOs in the country had bigger bonus upsides and smaller bonus downsides than their smaller-cap peers– aren’t these folks the primary occupants of the spotlight?

The final chapter in the CEO Pay trilogy, the S&P 600, will debut next Wednesday, and we’ll be interested to see if the trend for bigger downsides continues as the stakes get (slightly) smaller. In the meantime, if you’re full of burning questions for the statistical minds behind this epic, consider logging in to Equilar’s CEO Pay Strategies Webinar, also next Wednesday. You can sign up for it here.

Total S&P 500 CEO Pay Takes Market Hit, But Bonuses Rise

The Equilar CEO Pay Strategies report, based on 342 companies in the S&P 500, is out today, and regardless of whether you side with the CEOs or the shareholders, it’s a bit of a mixed bag. Median CEO pay declined for the second year in 2009, sliding 7.9% to a median of $7.5 million, but most of that is attributable to the decreased value of equity awards (options are down 17.7%, while stock is down 0.6%). A majority of 2008 awards remain underwater. The lucky CEOs who received their award grants in early 2009, however, have made out very well: their awards, given near the market bottom and often inflated in size to make up for price decreases, have made big gains in intrinsic value.

Since “pay,”  ”for,” and “performance” are the three biggest words in Washington right now, we were interested to see the report’s analysis of CEO bonuses based on company performance, which divided the 342 companies into quartiles. CEOs in the top-performing quartile got plenty of bonus love, to the tune of 86.8% increases in their bonus pay, but those in the bottom quartile saw declines of only 10.4% in their bonus payments– can you hear the cries of “what’s the downside” from here?

Thanks to these top performers, overall bonus pay was up 8.5% from 2008, with a median payout of $1.5 million. The percentage of CEOs receiving no bonus at all also decreased, from 18.4% in 2008 to 14.6% in 2009. One sign of the market rebound: the later a company filed, the higher their bonus payment was likely to be; the latest group of filers, in December ’09 and January ’10, saw their bonuses jump 13.3% year-over-year. If the “performance” in “pay for performance” referred to the overall market instead of the individual company, SEC utopia would be imminent.

Long-Term Goals Are Most Commonly Cited Risk Mitigator

April, the cruelest month of proxy season, is approaching its end, and in the wake of the numerous filings this month, interesting information is beginning to emerge, such as Equilar’s new report on risk disclosure. The SEC introduced new guidelines for discussion of risk this year, and there was a lot of buzz about how companies would (or wouldn’t) handle the new regulations. The good news is that there seems to be a lot of consensus: of the 100 large ($14.5+ billion in revenues) public companies Equilar surveyed, 72% noted long-term performance goals as a risk-management policy, while 59% cited ownership guidelines and 50% touted clawbacks. Don’t feel badly for those poor NEOs, though: 56% also cited balancing short-term performance goals with long-term ones as important. Not such an important risk-management tool: reducing or eliminating perquisites, which only one of the 100 companies cited.

The landscape isn’t free from disagreement, however. Pension plans were a notable opinion-divider, with some companies touting their employee-retention powers, while others emphasized cutting them to avoid short-term goal focus. It’ll be interesting to see how things normalize (or don’t) next year, when everyone has their peers’ disclosures as a baseline.

CEO Perks Decline in ’09

Perquisites have been a lightning rod in the exec comp debate, and many companies are knocking them out altogether in an attempt to avoid criticism, as a Wall Street Journal article reports today in conjunction with their CEO pay study.  Gross-ups were the biggest targets, with many CEOs seeing them cut or eliminated altogether. But some CEOs have avoided the perks axe: William Ford Jr. of Ford Motor Co. got a $900,000 bump in his security payouts over the past two years, presumably based on threats from auto-bailout naysayers (though Ford claims it’s a revision in how they report these figures).

Clawbacks also got some attention in the Journal piece: those who stay abreast of exec comp trends will remember that they rose from around 12% of the Fortune 100 in 2003 to a new high of 72.9% in 2009.

Expect plenty of pot-stirring next week in the aftermath of the New York Times Top 200 pay study, which is based on Equilar data and will be released on Sunday.

CEO Bonus Results From Latest Proxy Filings

Equilar released another round of the latest proxy findings from its CEO Bonus report today, and the picture is looking similar to last time, but with a lot more evidence to back it up. Companies with fiscal years ending in June-November saw a 29% decrease in median CEO bonus payouts, while companies with fiscal years ending in December (now a cohort of over 200) saw a 28.9% increase, with a median payout of $1,450,000.

By industry, financial bonuses were still flat, since last year’s median payout was $0, but consumer industry bonuses soared 116.9% over last year’s numbers, followed closely by the 87.5% rise for basic materials industry bonuses and the services industry’s 40.5% jump. The big losers: capital goods, down 43.9%, and technology, down 30.9%.