Median CEO compensation rises 6.9% to $7.04 million

2001 gain was smallest in a decade, study finds

August 20, 2002|By BLOOMBERG NEWS

NEW YORK - The median direct compensation for chief executives who run 350 of the largest U.S. companies rose 6.9 percent to $7.04 million last year, the smallest increase in at least a decade, as the slowing economy curbed pay raises, according to a study of executive pay.

Median annual pay for the CEOs - base pay and bonuses, excluding the grant value of long-term incentives - fell 2.8 percent to about $1.60 million last year, according to the study by Mercer Human Resource Consulting, a unit of Marsh & McLennan Cos. The median is a midpoint and indicates that as many pay packages were above the median as below.

Accounting scandals at Enron Corp. and WorldCom Inc. put outside directors under increased pressure to ensure that executives aren't improperly boosting earnings to protect the value of their stock incentives. The median compensation for outside directors last year rose 11 percent to $115,687. The pay includes meeting fees, annual retainer and options, Mercer said.

The majority of board members are "becoming increasingly wary of the risks involved in board service," Peter Oppermann, a senior executive compensation consultant at Mercer, said in an e-mailed statement. "The current rash of problems will make it harder for companies to attract good directors in the future."

The compensation study includes companies with median annual revenue of $6.2 billion and an average of 11 board members, Mercer said. The increase in total compensation for CEOs is the smallest since the study began, Mercer said.

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