Executive Pay Grows Faster Than Corporate Revenues in Past 12 Month
New York and Redmond, Wash. — Feb. 15
During the past 11 years, dollar revenues of U.S. publicly traded companies increased 93.0 percent while the highest paid executive’s compensation increased 24.7 percent, according to a one-year study and an 11-year study of executive compensation by ERI Economic Research Institute and Career Journal, The Wall Street Journal Online’s free career channel for executives, managers and professionals. However, during the most recent 12 months, revenues increased 2.8 percent, while executive compensation increased 20.5 percent.
Compensation Changes During the Past 12 Months
During the past 12 months, overall total compensation of the highest paid executive increased 20.5 percent, while revenues increased 2.8 percent. As of February 2008, the average top executive received overall total compensation of $18,813,697.
Compensation Changes During the Past 11 Years
The highest paid executives of U.S. publicly traded companies saw an increase in overall total compensation of 24.7 percent during the past 11 years. In comparison, the average dollar amount of company revenues increased by 93.0 percent. During this 11-year period, average dollar revenues increased 3.8 times faster than the average dollar amount of the executive total compensation packages.
The studies continue to show a trend away from guaranteed base salary and a shift from stock options to restricted stock awards. “More corporate boards are tying compensation packages to performance through incentive plans, stock options, restricted stock awards and long-term incentive plans,” observed Dr. David Thomsen, director of ERI Economic Research Institute.
The compensation indices reflect data from a representative group of 45 publicly traded companies randomly selected from the approximately 6,500 companies that report compensation data to the Securities and Exchange Commission (SEC). The February 2008 index has been adjusted to reflect merger activity that has occurred since the inception of the index. The index has tracked pay for the highest paid executive in this group of companies since 1997.