Thursday, March 25, 2010

CEOs Defy Obama With More Cash Instead of Pay for Performance

I think that saying compensation shrank is misleading. It depends on what happens with the stock prices. If the CEO's want cash instead of stock in their own compapny, what does that say? Obama and others would like company executives income to better reflect the longterm results of those executives decisions.

March 25 (Bloomberg) -- Total compensation for U.S. chief executive officers shrank by 8.6 percent last year, according to data compiled by Bloomberg BusinessWeek.

Boards offset some cuts in stock awards and options by boosting CEO salaries and bonuses, the data show.

With pay packages under pressure from President Barack Obama and shareholder activists, average compensation fell by 8.6 percent to $9.81 million for the 81 CEOs whose companies’ proxy statements were examined. While option awards were slashed by 30 percent, cash earnings, including non-equity incentive rewards, rose 8.3 percent.

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Pension plans gained an average of 15.4 percent or $1.27 million. One reason: the 8.3 percent rise in salary and bonus drove up the current value of what companies promised to pay CEOs in retirement, typically calculated as a percentage of their annual income.

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