San Mateo, California - Today, Equilar, Inc. released the results of its preliminary
analysis of S&P 500 CEO compensation trends. The analysis, covering 194 S&P 500
chief executives in place for at least two years at companies filing proxies under the
Securities and Exchange Commission’s (SEC) new disclosure rules, finds that CEO
pay increased by 6.0 percent, climbing to a median of $8,512,509 in 2006.
Key findings from Equilar’s preliminary study are outlined below:
Total Compensation
In 2006, S&P 500 chief executives in place for at least two years received a median
total pay package of $8,512,509. Total compensation is calculated as the sum of
base salary, discretionary bonuses, non-equity incentive plan payouts, stock awards,
option awards and other compensation. Stock awards include long-term performance
shares and units. Option awards include stock appreciation rights (SARs).
Basy Salary
From 2005 to 2006, the median base salary for S&P 500 chief executives increased
by 0.1 percent, growing from $998,750 to $1,000,000.
Bonus
In 2006, chief executives at S&P 500 companies earned a median bonus of
$1,850,900, up 11.1 percent from the median bonus of $1,665,380 in 2005. To
make comparisons between 2005 and 2006, fiscal year 2006 bonuses are calculated
as the sum of discretionary bonuses and the short-term portion of non-equity
incentive plan payouts.
The prevalence of chief executives receiving a bonus increased from 94.8 percent in
2005 to 96.4 percent in 2006. Only 20.1 percent of chief executives received a
guaranteed or discretionary bonus in 2006.
The median target bonus for S&P 500 chief executives in 2006 was $1,320,000, or
132.0 percent of the median base salary.
Stock Option Awards
In 2006, chief executives at S&P 500 companies received stock option awards with a
median value of $3,247,443, a decline of 7.5 percent from the median grant value of
$3,510,809 in 2005. To make comparisons between 2005 and 2006, the values for
option awards are estimated using the Black-Scholes methodology.
The prevalence of chief executives receiving stock option awards decreased from
79.9 percent in 2005 to 77.8 percent in 2006. Additionally, the number of options
granted fell from a median of 227,130 in 2005 to a median of 210,000 in 2006.
Stock Awards
In 2006, chief executives at S&P 500 companies received stock awards (including
long-term performance shares and units) with a median value of $3,147,083, an
increase of 11.0 percent over the median grant value of $2,834,974 in 2005.
The prevalence of chief executives receiving stock awards (including long-term
performance shares and units) increased from 72.2 percent in 2005 to 75.3 percent
in 2006.
Other Compensation
The median value of other compensation for chief executives at S&P500 companies
was $203,102 in 2006—a 9.5 percent increase over the median value of $185,458
reported in 2005. A large portion of this increase is explained by the SEC’s lowering
of disclosure thresholds for benefits and perquisites in 2006.
To make comparisons between 2005 and 2006 most accurate, 2005 other
compensation is calculated as the sum of the ‘other annual compensation’ and ‘all
other compensation’ columns of the Summary Compensation Table.
Pension Benefits and Deferred Compensation
In 2006, the median value of accumulated pension benefits for S&P500 chief
executives was $6,675,779, and the median deferred compensation plan balance
was $3,741,573.
Among S&P 500 companies, 80.9 percent of chief executives currently have pension
benefits and 85.1 percent have deferred compensation plans.
The median value for the ‘change in pension value and nonqualified deferred
compensation earnings’ reported in the Summary Compensation Table in 2006 was
$937,000 for S&P500 chief executives.
To learn more about these and other findings or to receive a complete copy of,
please call 1-877-441-6090 or visit www.equilar.com.
