Most CEOs Are Underpaid - The Reality Behind CEO Pay

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While most headlines on CEO pay focus on the total compensation packages of the CEOs of the largest public companies, the reality is that the vast majority of CEOs did not enjoying multi-million dollar pay packages in 2012. According to the new CEO and Senior Executive Compensation in Private Companies Report, produced by Chief Executive Group, the median CEO earned $326,000 in cash compensation in 2012 (base salary and bonus) and total compensation of $360,000 including benefits, perks and equity gains.

“To assume all CEOs have lavish compensation packages based on the compensation packages enjoyed by the largest public companies, is like saying all actors and actresses are overpaid based on what Academy Award winning actors command.” Wayne Cooper

Of the roughly 30 million businesses in the United States, fewer than 6,000 are publicly traded and only the largest 8% of these public companies make it into the S&P 500. Despite this reality, most people focus on the $14.1 million average annual pay package for the CEOs of the S&P 500 companies in 2012 and mistakenly assume that this 0.002% of companies is representative of all CEOs.

According to Chief Executive Group Chairman Wayne Cooper “To assume all CEOs have lavish compensation packages based on the compensation packages enjoyed by the largest public companies, is like saying all actors and actresses are overpaid based on what Academy Award winning actors command.” The top .1% in most fields earn much more than the average participant.

Median compensation for private company CEOs is virtually flat with the prior year, and has not kept up with the 2.1% inflation rate in 2012, let alone the 5% average increase enjoyed by the CEOs of the largest public companies.

Chief Executive Group’s research found that for the vast majority of companies, CEO compensation is positively correlated with a company's size and complexity (in terms of revenue and number of employees) as well as its performance (that is, revenue growth and profitability). The larger and more profitable a company is, the more its CEO is paid.

Most CEOs are leaders who build businesses, create jobs and contribute to their communities. While some people continue to vilify all CEOs for excess pay and mistakenly assume that all CEOs enjoy the lavish compensation packages of the largest public company CEOs, the reality is far different.

For more information about the CEO & Senior Executive Compensation Report for Private Companies 2013-2014, which includes benchmarking data by quartile on base salaries, bonuses, benefits, perks and equity compensation for CEOs and 9 other senior executive positions (e.g. President, COO/GM, CFO, CMO, VP Sales, VP R&D , VP HR) and how these benchmarks vary by company size, industry, type of ownership and other key variables, please visit ChiefExecutive.net/compreport.

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