19 September 2011

CEO Pay Trends

CEO and top executive compensation for firms with $500,000 or more of revenue fell in 2007 and 2008 from the prior years in absolute terms, but rose as a percentge of corporate profits to almost 50% as the performance of their firms fell faster than their pay did.

Measured in 2008 dollars, the 990,077 corporate officers whose compensation was reported on tax returns made $466.8 billion in 2008, down slightly from $471.4 billion in 1998.

In 2008 their average compensation was $471,500, down about 13.5% from an estimated $545,100 in 1994.

The IRS measure doesn't include stock option earnings and non-qualified deferred compensation until it is realized in most cases, despite the immense role that this form of compensation plays in the total pay package fo top executives.

The IRS data also don't segregate closely held companies, where there is near identity between the top executive group and the owners, making compensation of even 100% of profits reasonable, and those where there is not identity between ownership and management, where investors expect some return on their investment.

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