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CEO salaries jumped 30 percent in 2004

When it comes to chief executives and their compensation, a new survey makes it clear: It’s nice work if you can get it.
/ Source: Reuters

When it comes to chief executives and their compensation, a new survey makes it clear: It’s nice work if you can get it.

A typical chief executive at the biggest U.S. companies was last year awarded $5.74 million of compensation, 30.2 percent more than in 2003, according to a survey released Thursday by the Corporate Library, a corporate governance research group in Portland, Maine.

The average CEO at companies in the Standard & Poor’s 500 index was paid even more — $11.71 million.

The median increase was more than nine times last year’s 3.3 percent rise in U.S. consumer prices, and double the 15 percent increase a year earlier. The average increase was 91 percent, a number distorted by the 27 CEOs whose compensation swelled more than 1,000 percent.

“We’re seeing the kinds of pay increases we saw in the 1990s,” said Paul Hodgson, senior research associate at the Corporate Library, in an interview.

“While we are seeing some changes, especially as more companies expense stock options, we still see many CEOs paid with restricted stock and stock options,” he continued. “This tends to reward everyone in a rising stock market, whether they outperform their peers or not.”

Surveyors examined CEO compensation at 2,000 of the largest U.S. companies, and compiled data on 1,843. The Corporate Library survey includes salary, bonus, incentive payouts, restricted stock and the realized value of options, a broader definition than some compensation experts use. The average CEO salary was $711,000, and a typical bonus was about $1.03 million.

According to the survey, the highest paid CEO in the S&P 500 was Yahoo Inc.’s Terry Semel, who was awarded $230.6 million, mostly through stock options.

Shareholders voiced their displeasure at the amount last May when they withheld nearly one-fifth of their votes for reelection of three board directors who sat on the Internet media company’s compensation committee.

Trailing Semel, if that’s the word, was UnitedHealth Group Inc.’s William McGuire, who was awarded $124.8 million, and Waters Corp.’s Douglas Berthiaume, who was awarded $109.7 million, both mostly from stock options. UnitedHealth is a health insurer, and Waters makes drug research instruments.

More money
Ranking seventh was Exxon Mobil Corp.’s Lee Raymond, whose $81.7 million compensation package included $28 million in restricted stock, the survey showed.

Exxon last year increased net profit 21 percent to $25.33 billion on $291.25 billion of revenue. Raymond became CEO in 1993, and will retire from that role at the end of this year.

“Given the amount he has earned as CEO, what possible motivation could there be from awarding him more stock?” Hodgson said.

Exxon did not immediately return a call seeking comment.

CEOs in other industries are also well paid.

Sumner Redstone, who runs media company Viacom Inc.’s , was awarded more than $56 million, while Stanley O’Neal, who runs Merrill Lynch & Co., was awarded $32 million, securities filings show.

Hodgson faulted companies who use the “market rate” for other CEOs as a basis for paying their own, whether they are worth it or not.

At the other end of the pay spectrum was Apple Computer Inc.’s  Steve Jobs, who took $1 in compensation after previously receiving $74.75 million of restricted stock, the survey said.

Also near the bottom: Berkshire Hathaway Inc.’s  Warren Buffett, who annually takes a $100,000 salary. Buffett, of course, had a recent net worth of $40 billion according to Forbes magazine.