US corporate chiefs enjoy fat pay rises

Base salaries up 4% to median of $1.67m last year on jump in value of stock grants



WASHINGTON - COMPENSATION for chief executives (CEOs) in the United States rose strongly last year, amid a surge in the value of stock grants, a survey showed on Thursday.

The survey by consulting firm Watson Wyatt Worldwide showed that CEO base salaries rose 4 per cent to a median of US$1.1 million (S$1.67 million). But that was only a small portion of overall compensation.

Bonuses rose 13 per cent and the value of equity-based compensation holdings rose nearly 50 per cent, according to the survey based on an analysis of proxy statements.

The median for CEO annual bonuses was US$2.2 million; for stock compensation, including options and other equity grants, US$30.2 million.

'Corporate America enjoyed a banner financial year in 2006,' said Mr Steve Van Putten, a senior executive compensation consultant at Watson Wyatt. 'CEO pay moved in step with corporate earnings and stock prices, reflecting the trend towards performance-based compensation.'

The survey was based on 92 large firms whose CEOs stayed in their positions in 2005 and last year. Watson Wyatt said the firms posted an average rise of 18 per cent in returns to shareholders.

The survey found some correlation between better-performing firms and CEO compensation.

Firms that gave shareholders a return of at least 30 per cent also nearly doubled CEO equity compensation to US$31.3 million.

CEOs at 'low-performing companies' saw their equity compensation increase by 13 per cent.

'The correlation between realisable pay - the value of outstanding long-term incentives granted to executives over a specific timeframe - and company performance remains as strong as ever,' said Mr Ira Kay, the global director of compensation consulting at Watson Wyatt.

'It is also a good reminder that, because stock options are highly leveraged, even a small increase in stock price appreciation can lead to an increase in value for other CEOs.'

The rise in CEO pay has triggered a backlash over extravagant pay packages for US corporate executives - one that has moved from boardrooms to Congress and now even to the White House and US President George W. Bush.

Mr Bush, in a visit to Wall Street in February, urged corporate boards to tie pay and bonuses to job performance.