CEO Compensation Declined in 2008
Taxpayers outraged by corporate bonuses may want to put their pitchforks down, for the moment. According to today's Wall Street Journal, CEO compensation declined in 2008 — at least at the nation's largest public corporations. The decline was the first in seven years and only the second since The Journal began tracking CEO pay in 1989. The compensation analysis was conducted for the newspaper by Hay Group, a management consulting firm, which examined proxy statements for companies with more than $5 billion in annual revenue. It found that median salaries and bonuses for CEOs of those 200 companies fell 8.5% to $2.24 million. Their total compensation, which includes the value of stock, stock options and other long-term incentives, fell by 3.4% to a median of $7.56 million.
Was this the result of restraint triggered by public anger over executive compensation packages? Maybe not. The packages analyzed were based on contracts negotiated long before the controversy reached a fever pitch with the revelation of AIG's intention to pay $165 million in bonuses to employees, including traders in the financial products unit that nearly brought about the insurance company's collapse. Indeed, most of the outrage was aimed at bonuses paid to executives at companies — mostly banks – that received taxpayer-financed rescue funds. A list of bonuses at those companies and of the highest-paid CEOs is included in The Journal's package.
Fore more on the executive compensation controversy, see the Knowledge at Wharton article, "Outrage over Outsized Executive Compensation: Who Should Fix It and How?" and these earlier KnowledgeToday posts: "Wall Street Strikes Back" and "Congress Bares Its Clawbacks."