CEO Bonuses Declined in 2007

The amount that CEOs received as bonuses declined nearly 5 percent from 2006 to 2007. according to a study by Equilar, an executive compensation research and benchmarking firm. Almost 40 percent received smaller payouts than they did the year before.

The survey of 108 companies with revenues over $1 billion and fiscal years ending on or after August 31, 2007, finds that the median CEO bonus declined by 4.5 percent from 2006 to 2007. For the same executives, bonuses had increased by 27.1 percent from 2005 to 2006. These companies are among the first to file compensation data for 2007 after the impact of the economic slowdown beginning last summer.

The median CEO bonus at the sample companies dropped from $862,404 to $823,309 from 2006 to 2007.

Among the sample group, 38.0 percent of CEOs received a smaller bonus in 2007 than in the prior year. From 2005 to 2006, the prevalence of CEOs receiving a smaller bonus than the year before was 28.7 percent.

The study also looked at death benefits and found that in fiscal year 2006, 17.2 percent of Fortune 100 companies disclosed that their CEO is entitled to receive death benefits. Likewise, 16.1 percent of named executive officers (NEOs) are in-line to receive similar payments.
Death benefits are defined as termination payments triggered by death.

Typically these payments are structured in a similar fashion to severance and change-in-control benefits where basic payments are set as a multiple of base salary and/or bonus. For the same group, 39.8 percent of CEOs and 40.8 percent of NEOs are eligible to receive life insurance.