Why are CEOs getting more cash?

Posted by Irv Becker

According to the first 50 results from the latest Wall Street Journal/Hay Group survey, CEO compensation at large US corporations rose again in 2014, with median pay up 6.9 percent to $12.2m, vs. a 4.3 percent rise in 2013. The notable trend in these numbers is the increase in cash compensation as a percentage of total compensation. This is in sharp contrast to what we have observed in recent years as long-term incentives have been reflecting an increasingly greater portion of the overall pay package in response to shareholder and board desires for greater alignment with longer-term outcomes of the business.

Limited room for maneuver

The last 5-10 years has seen compensation committees shift variable rewards toward long-term incentives (usually performance-based equity and away from stock options), while salary increases have historically tended to provoke complaints from institutional shareholders. Today, however, big corporations’ room for maneuver is becoming limited.

Shareholder resistance

W ...

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