|REDMOND, WA - May 13, 2009 - During the most recent 12 months, the average base salary of the highest paid executives in US publicly-held companies decreased by 23.9%. This is the largest decrease in base salaries since ERI Economic Research Institute started tracking the ERI Executive Compensation Index 12 years ago.
While the average base salary dropped dramatically, overall total compensation decreased by 3.3% during the same 12-month period. Total compensation has been declining for the past five quarters. The only components of compensation showing increases were bonuses/non equity incentives (up 1.0%) and other compensation (up 15.4%).
Compensation Changes during the Past 12 Months
From May 2008 to May 2009, overall Total Compensation of the highest-paid executive decreased by 3.2%, with the average top executive receiving $16,651,942. During the same period, average company revenues grew 5.9%. During this period the components of compensation for the highest-paid executive changed as follows:
| ||May 2008||May 2009||Percent Change|
|Salary ||$1,585,570 ||$1,206,572 ||-23.9%|
|Bonus and Non-equity Incentives ||$3,977,219 ||$4,017,300 ||1.0%|
|Total RSA/Options ||$9,091,875 ||$8,844,306||-2.7%|
|Restricted Stock ||$4,787,426 ||$4,798,263 ||0.2%|
|Stock Options ||$4,304,449 ||$4,046,043 ||-6.0%|
|Pension ||$1,720,194 ||$1,618,505||-5.9%|
|All Other ||$836,262 ||$965,259 ||15.4%|
|Total Overall Compensation ||$17,211,120 ||$16,651,942 ||-3.3%|
|Company Revenues (Millions) ||$59,701 ||$63,213 ||5.9%|
Compensation Changes Since 1997
Since 1997, the Total Compensation of the highest paid executive increased at an average yearly rate of less than 1.0%. For the 12 year period, the Total Compensation of the highest paid executive increased by 10.4%. During these 12 years the composition of executive compensation also changed significantly:
|Compensation Components||1997 Average Dollar Amount||2009 May Dollar Amount||Percent Change|
|Salary ||$930,640 ||$1,206,572 ||29.7%|
|Bonus and Non-equity Incentives ||$1,579,871 ||$4,017,300 ||154.3%|
|Total RSA/Options ||$11,798,521 ||$8,844,306 ||-25.0%|
|Restricted Stock ||$1,310,575 ||$4,798,263 ||266.1%|
|Stock Options ||$10,487,946 ||$4,046,043 ||-61.4%|
|Pension || ||$1,618,505 |
|LTIP ||$441,749 || |
|All Other ||$335,769 ||$965,259 ||187.5%|
|Total Overall Compensation ||$15,086,550 ||$16,651,942 ||10.4%|
|Company Revenues (Millions) ||$28,547 ||$63,213 ||122.1%|
The components of Total Compensation for the highest paid executive have changed in relative importance during the past 12 years as shown below:
|Salaries ||16.5% ||9.8%|
|Bonus ||21.7% ||4.1%|
|Incentives (non-equity)* || ||17.1%|
|Total RSA/Options ||52.7% ||55.7%|
|RSA (restricted stock) ||10.2% ||31.8%|
|Stock Options ||42.5% ||23.9%|
|Pension* || ||8.4%|
|LTIP ||3.6% |
|All Other ||5.4% ||5.0%|
* Non-equity Incentives and Pension were not part of the format of the 1997 SEC Summary Compensation Tables.
The trend away from guaranteed base salary along with a shift from stock options to restricted stock awards has continued throughout the period of the study. "More corporate boards are tying compensation packages to performance through Incentive Plans, Stock Options, and Restricted Stock Awards. There has been a noticeable shift away from Stock Options to Restricted Stock Awards. It appears Pensions and Non-Equity-based compensation components are accounting for a greater share of Total Compensation," observed Dr. David Thomsen, ASA, Director, ERI Economic Research Institute.
ERI created this index of Executive Compensation 12 years ago. Since its inception in 1997, ERI has tracked the changes in the highest paid executive of the average company in terms of the percentage change. Since 1997, the average revenue of the companies included in the May 2009 index increased 169.0% while the average total compensation for the highest paid executive increased 162.3%. For the average company in the index, total compensation for the highest paid executive increased at about the same pace as company revenues.
Average Changes in Total Compensation and Revenues Companies Equally Weighted
|1997||May 2009||Percent Change|
|Total Compensation ||100.0 ||263.3 ||162.3%|
|Revenue ||100.0 ||269.0 ||169.0%|
The Compensation Indices reflect data from a representative group of 45 companies randomly selected from the approximately 6,500 companies that report compensation data to the Securities and Exchange Commission (SEC). The index has been adjusted to reflect merger activity that has occurred since the inception of the index. ERI has tracked pay for the highest paid executive in this group of companies since 1997.
View May 2009 Total Executive Compensation Line Graph.
View May 2009 Total Executive Compensation Bar Graph.
View May May 2009 Highest Paid Executive - Pay Components Graph.
View May 2009 Highest Paid Executive Dollar Components Pie Chart.
View May 2009 Highest Paid Executive Compensation Components Pie Chart.
View Highest Paid Executive Compensation Components from 1997 to Present.
View 1997 Highest Paid Executive Compensation Components Pie Chart.
ERI Economic Research Institute is a leader in compensation and performance metric information. Based in Redmond, Washington, ERI provides salary survey and cost-of-living research reports and software to over 15,000 organizations worldwide. With information gathered from online surveys and an extensive survey library, ERI provides subscribers with assessments on salary, relocation, the cost of living, and executive compensation. ERI's pay data covers the United States, Canada, and the EU. Its industry-leading Executive Compensation Assessor® & Surveysoftware reports executive cash compensation based on information from private executive pay surveys, as well as publicly reported information for 6,500 US, 1,150 Canadian, and 2,300 UK and EU organizations. For analysis of executive pay in tax-exempt organizations, see ERI's Nonprofit Comparables Assessor™ & Tax-Exempt Survey software, which utilizes the ERI database of 28,000,000 measures from over 525,000 organizations. Both the IRS National Appeals and Tax Exempt Entities Divisions use these two Assessor Series® products in their reviews of reasonable and unreasonable compensation. Visit www.erieri.com to learn more about ERI and to review its other talent management and compensation indices.