The CEO Pay Gap Widens

The rates of increase in CEO pay at the largest S&P 500 index firms were three to four times higher than at the smallest S&P index companies. This is according to the latest CEO pay survey from The Corporate Library, an independent provider of corporate governance and executive compensation data and risk analysis.

The median increase in total actual compensation between 2006 and 2007 was 22 percent for S&P 500 CEOs and 15 percent for Midcap CEOs. On the other hand, Smallcap CEOs received a median pay increase of 5.5 percent. The Corporate Library’s calculation for total actual compensation includes profits realized on the exercise of stock options and value realized from vesting restricted stock awards.

Total actual compensation increases are well ahead of rises in annual compensation, which includes base salary and annual cash bonuses. “While 2007 was a relatively unsuccessful year for many companies, and this can be seen in the single digit increases in total annual compensation, this had yet to affect equity compensation,” said Senior Research Associate Paul Hodgson, co-author of the report. “On the other hand, total annual compensation did not go down.”

The survey, also co-authored by Research Associate Greg Ruel, examined compensation data in 3,242 U.S. and Canadian companies, making it one of the most comprehensive CEO pay surveys on the market. Median total actual compensation for all CEOs in the survey was just over $2,000,000, but levels varied widely. For example, Lawrence Ellison, CEO of Oracle, earned almost $193 million, while some CE Os earned nothing. Median total actual compensation for S&P 500 CE Os was just over $9.2 million.

“The Corporate Library’s CEO Pay Survey: CEO Pay 2008” is available for download in The Corporate Library’s online store. A fee is required to purchase the report.