CEO Pay Climbs

More women top the compensation list

By Eve Tahmincioglu

CEO compensation rose in 2016, compared to the prior year, and more women ended up on the list of highest page top executives.

Two compensation studies – one from Equilar and another from Willis Towers Watson – released this week found a 6% increase in CEO pay, including salary and incentives, year over year.

Equilar’s research included a roundup of the highest paid CEOs, finding:

  • The highest-paid were higher-paid in 2016. Equilar 100 companies included eight CEOs with pay packages over $30 million in fiscal 2016, vs. just four in last year’s study. Thomas Rutledge of Charter Communications received $98 million in total compensation, bolstered by a $78 million options grant.
  • More female CEOs graced this year’s list, and once again, were paid more than males overall. Nine CEOs on this year’s Equilar 100 list are female, an increase from eight represented for fiscal year 2015. Once again, female CEOs far outpaced the median pay for the Equilar 100 as a whole. Median total compensation for these nine women was $21.2 million in 2016, compared to a median $14.4 million for the 92 male CEOs in the study. Safra Catz of Oracle was the highest-paid female CEO in 2016, though her total compensation dipped to $40.9 million after reaching $53.2 million the year prior.

Top women include Oracle's Safra Catz with more than $40 million and Hewlitt Packard's Meg Whitman with about $33 million, according to Equilar's report. At the top of the list overall was Thomas Rutledge, the CEO of Charter Communications, coming in at nearly $100 million in compensation.

Willis Towers Watson reviewed the pay of 365 S&P 1500 companies with consistent CEOs, and found:

  • CEO salaries increased 2% in 2016, following a 2% increase in 2015.
  • Annual bonuses increased 5% at the median, mostly flat with the previous year. 
  • More companies (59%) paid their CEOs annual incentive awards that were at or above target levels in 2016, compared with 58% in 2015.
  • The exercise value of stock options declined sharply (55%) at the median. Target long-term incentives, the largest component of total CEO pay in major companies, increased 4% at the median in 2016, down from an increase of 9% in 2015.

While overall compensation is on the rise, the increase has clearly recovered since 2007 is not like anything seen in in 1999 and 2000, stresses Steven N. Kaplan, finance professor and corporate governance expert at the University of Chicago Booth School of Business.

Steven Kaplan“They’re paid a lot, don’t get me wrong, but CEO pay is way down from where it was 15 years ago,” he explains.

So why the slow down?

The expensing of options and CEO pay scrutiny have made a difference.

“Boards didn’t focus on options as carefully in the 90s because they weren’t expense,” he notes. And say on pay votes have gotten boards thinking about how they compensate top executives. “They’re thinking about it more economically than they used to.”

However, the conundrum, he adds, is “if CEO pay is too much you’ll hear from your shareholders. But if it’s not enough you lose talent.”