CEO Pay Gap Widens

CEO pay increased in 2007 at a much higher rate at S&P 500 companies than at smaller firms, according to The Corporate Library’s Preliminary CEO Pay Survey. The study, released today, finds that the median increase in CEO pay at S&P 500 corporations was almost 16 percent, compared to a median increase of only 2 percent at other companies. The median rate of increase in CEO pay for all companies in the study sample was 5 percent, less than half the 2006 median increase.

While there has been an overall slowdown in pay, the CEOs of the S&P 500 have been less affected by this than CEOs of smaller companies. As CEO compensation analysis has increased in importance, we have substantially discounted the pricing on this report to make it more accessible.

“The median increase in annual compensation of just over 5 percent was driven largely by base salary rises and increases in the cost of benefits and perquisites,” said Senior Research Associate Paul Hodgson, the author of the study. “Given the focus on perks, and the anecdotal evidence that many boards were set on reducing them, this comes as something of a surprise. Perhaps the high cost of jet fuel is driving costs up.” On the other hand, the dramatic fall in the number of CEOs receiving cash bonuses contributed significantly to the overall slowdown in pay growth.

The report, titled The Corporate Library’s Preliminary CEO Pay Survey: CEO Pay 2007, is based on a survey of 614 companies that filed a proxy statement in the first quarter of 2008. It represents an early analysis of pay movements prior to The Corporate Library’s full report, due this fall, that will cover more than 3,200 companies. The 12-page preliminary report is available for $45 from The Corporate Library’s online store at www.thecorporatelibrary.com.