Report: Performance-based pay for CEOs on the rise
The share of CEOs receiving some form of performance-based equity continues to rise, according to Equilar, a leader in executive compensation benchmarking and governance research.
It was 75.7 percent in the S&P 500 and 63.8 percent in the S&P 1500 in 2013.
Median S&P 500 performance stock compensation grew to more than $3.4 million last year, which was up 7.3 percent from 2012 and 52 percent from 2009, according to Equilar. In the S&P 1500, the median value rose nearly 50 percent to about $1.9 million from 2009 to 2013.
“This evolution of CEO pay mix represents a continued convergence toward the vehicles most favored by investors as companies lacking clear alignment between pay and performance face increasing difficulty garnering shareholder support for say on pay votes,” the firm’s latest report said. “Options in particular have declined in terms of the average value delivered to a CEO as many investors question whether they are the most preferable compensation vehicle for large, mature companies not expected to experience meteoric growth.”
By sector, utilities had the highest prevalence of performance-based equity awards at 94.5 percent, while technology picked up the rear at 52.7 percent, according to Equilar.
Options accounted for 17.5 percent of the value of an average S&P 500 CEO’s 2013 pay package, according to Equilar. That was down from 18 percent in 2012 and 23.1 percent in 2009. In the health care sector, it was 25.3 percent, on average, in the S&P 1500.
Driven by record highs in the S&P 500 and a 32.8 percent total return for S&P 1500 investors, the 2013 median CEO compensation climbed 9.5 percent to $10.1 million in the S&P 500 and 8.5 percent to $5 million in the S&P 1500.
Also of note, the average age of an S&P 1500 CEO fell to 50.8 years in 2013, which was down from 53 in 2009. And the number of female CEOs within the S&P 1500 in place for at least one year has grown to 53 from 36 in 2009.