According to ERI Economic Research Institute/CareerJournal.com Study
New York, NY and Redmond, WA - Sept. 6, 2007 - It may seem like executives are making too much money, but corporate revenues have had a greater increase during the past ten years compared to the increase in overall total compensation of top executives, found new executive compensation studies released today by ERI Economic Research Institute (www.erieri.com) and Career Journal.com (www.CareerJournal.com), The Wall Street Journal's free career site for executives, managers, and professionals.
The survey showed that between 1997 and August 2007, U.S. publicly-traded companies increased by 116.6% the average executive Total Cash Compensation (TCC), which includes salary, bonus, and non-equity incentive as compared to the revenue increase of 131.5% for the same ten-year period. During the same time period, Overall Total Compensation (TCC, stock options, pensions, incentives, and all other compensation) of the highest paid executives increased by 20.7% while company revenues increased by 131.5%. Both studies show average company revenues increasing faster than both Overall Total Compensation and Total Cash Compensation.
Over the last 12 months, the average top executive received Overall Total Compensation of $18,115,082 of which $4,762,307 was Total Cash Compensation (TCC). During the past year, restricted stock awards and stock options have increased by 24.8%, while Total Cash Compensation rose by 0.5%. The index continues to show a trend away from guaranteed base salary and a shift from stock options to restricted stock awards. In August 2006, the Overall Total Compensation index was lower than the 1997 index primarily due to option grants being smaller in 2006 than 1997.
"More corporate boards are tying compensation packages to performance through Incentive Plans, Stock Options, Restricted Stock Awards, and Long Term Incentive Plans," said Dr. David Thomsen, Director, ERI Economic Research Institute.
Tables from the ERI Economic Research Institute/CareerJournal.com Study are below. They 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 August 2007 index has been adjusted to reflect merger activity which has occurred for this group of companies since the inception of the index in 1997.
To view the complete report on the August 2007 Executive Compensation Index, please visit www.erieri.com and click on News Room at the bottom of the page.
About CareerJournal.com
CareerJournal.com is The Wall Street Journal's award-winning career site targeted to executives, managers and professionals.
About ERI
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 data covers the United States, Canada, and the United Kingdom and Euro countries. Its industry-leading Executive Compensation Assessor & Survey software 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 publicly-traded organizations. For analysis of executive pay in tax-exempt organizations, see ERI's Nonprofit Comparables Assessor & Tax-Exempt Survey software, from the ERI database of 28,000,000 measures from over 485,000 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.
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