[T]he median private company CEO in our survey earned a total compensation package of $362,900. That is just 3.8% of the $9.6 million number reported as 'typical' by the Associated Press.
Greenwich, CT (PRWEB) January 31, 2013
The reality of CEO compensation is drastically different from the coverage given by major media outlets, according to research recently conducted by Chief Executive magazine for the annual CEO & Senior Executive Compensation Report for Private Companies.
In 2011, the median private company CEO in our survey earned a total compensation package of $362,900. That is just 3.8% of the $9.6 million number reported as "typical" by the Associated Press. For private companies with at least $1 billion in revenue, the median CEO compensation package totaled just under $1.7 million, which is still less than 18% of the AP figure.
Chief Executive magazine's research division recently conducted the most comprehensive surveying and analysis of private company compensation in the U.S. The data collected in this research from 1,101 private companies paint a starkly different picture of CEO compensation from what is portrayed by mainstream media.
Median compensation for private company CEOs is up only 1.9% from 2010's $356,133. Despite over 70% our respondents' reporting increased revenue in 2011 versus the previous year and 90% of all of the companies we surveyed being profitable, private company CEO pay packages increased less than the rate of inflation (3.2% in 2011).
The median CEO did not accrue any equity appreciation over the last year or new in-the-money equity grants and had relatively unchanged pay in both base salary and bonus. This demonstrates the vast majority of CEOs' willingness to adjust their own compensation to position their companies to survive during turbulent economic times.
Rather than outlandish and misaligned pay packages that benefit the CEO to the detriment of the company, its employees and shareholders, our research found quite the opposite as the standard practice at private companies in the United States. CEO compensation is strongly positively correlated both 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. The median CEO among unprofitable companies did not even receive a bonus in 2011, which is especially meaningful considering 78.1% of the CEOs surveyed did receive bonuses.
CEOs are leaders who build businesses, create jobs and contribute to their communities, and, by and large, they do each of these successfully. Mainstream media seems content to vilify and incriminate CEOs for their compensation to hype story lines of the 99% versus the 1%, corporate greed, and the out-of-touch nature of business leaders. However, the reality is far different from that.
The results of our research clearly indicate that the vast majority of CEOs earn generous yet fair compensation, private companies are responsive in their executive pay packages to macro conditions and individual business performance, and the thesis parroted time and again by mainstream media does not reflect reality.
For more information about the CEO & Senior Executive Compensation Report for Private Companies, which includes compensation benchmarking and best practices data for CEOs and 9 other senior executive positions, and the top and bottom quartiles in addition to median and average pay packages by company size, industry and other key variables.