CEOs' median pay tops 8 figures

Average in U.S. at $10.5 million

NEW YORK -- Propelled by a soaring stock market, the median pay package for a chief executive officer rose above eight figures for the first time last year in the United States, according to an Associated Press/Equilar pay study. The head of a typical large public company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012.

The median signifies the midpoint. Pay packages were higher than $10.5 million for half the companies measured in the study, lower for the other half.

Last year was the fourth-straight that CEO compensation rose after a decline during the recession. The median CEO pay package climbed more than 50 percent over that stretch. A chief executive now makes about 257 times the average worker's salary, up from 181 times in 2009.

The best paid CEO last year led an oil-field services company. The highest paid female CEO was Carol Meyrowitz of discount retail giant TJX, owner of TJ Maxx and Marshalls.

Over the past several years, companies' boards of directors have tweaked executive compensation to answer critics' calls for CEO pay to be more attuned to performance. They've cut back on stock options and cash bonuses, which were criticized for rewarding executives even when a company did poorly. Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options.

The change became a boon for CEOs last year because of a surge in stocks that drove the Standard & Poor's 500 index up 30 percent. The stock component of pay packages rose 17 percent to $4.5 million.

Former Wal-Mart CEO Mike Duke earned $5.6 million in 2013, ranking 292nd on the Associated Press list. Duke's salary declined 73 percent from 2012 to 2013 as he was being replaced by Doug McMillon.

Duke was the only executive from an Arkansas-based company to make the Associated Press list. Wal-Mart and Tyson are both included on the S&P 500, which is a measure "of leading companies in leading industries."

Methodology for including companies on the S&P 500 include market capitalization of at least $4.6 billion, liquidity and readily available shares for public trading.

Tyson CEO Donnie Smith earned about $1.8 million in 2013, according to the company's proxy statement. A 2013 Arkansas Democrat-Gazette report on executive compensation in Arkansas ranked William Dillard II as the state's top-paid CEO. Dillard earned $36.01 million in 2012 and $3.92 million in 2013, but the clothing retailer is not among the S&P 500.

"Companies have been happy with their CEOs' performance, and the stock market has provided a big boost," said Gary Hewitt, director of research at GMI Ratings, a corporate governance research firm. "But we are still dealing with a situation where CEO compensation has spun out of control and CEOs are being paid extraordinary levels for their work."

To calculate a CEO's pay package, the AP and Equilar looked at salary as well as perks, bonuses and stock and option awards, using the regulatory filings that companies file each year. Equilar looked at data from 337 companies that had filed their proxies by April 30. It includes CEOs who have been at the company for two years.

The highest paid CEO was Anthony Petrello of oil field services company Nabors Industries, who made $68.3 million in 2013. Petrello's pay ballooned as a result of a $60 million lump sum that the company paid him to buy out his old contract.

Nabors Industries did not respond to calls from The Associated Press seeking comment.

Petrello was one of a handful of chief executives who received a one-time increase in pay because boards of directors decided to renegotiate CEO contracts under pressure from shareholders. Freeport-McMoRan Copper & Gold CEO Richard Adkerson also received a one-time payment of $36.7 million to renegotiate his contract. His total pay, $55.3 million, made him the third-highest paid CEO last year.

The second-highest paid CEO among companies in the S&P 500 was Leslie Moonves of CBS. Moonves' total compensation rose 9 percent to $65.6 million in 2013, a year when the company's stock rose nearly 70 percent.

"CBS's share appreciation was not only the highest among major media companies, it was near the top of the entire S&P 500," CBS said in a statement. "Mr. Moonves' compensation is reflective of his continued strong leadership."

Media industry CEOs were, once again, paid handsomely. Viacom's Philippe Dauman made $37.2 million while Walt Disney's Robert Iger made $34.3 million. Time Warner CEO Jeffrey Bewkes earned $32.5 million.

The industry with the biggest pay bump was banking. The median pay of a Wall Street CEO rose by 22 percent last year, on top of a 22 percent increase the year before. BlackRock chief Larry Fink made the most, $22.9 million. Kenneth Chenault of American Express ranked second with earnings of $21.7 million.

Like stock compensation, performance cash bonuses jumped last year as a result of the surging stock market and higher corporate profits. Earnings per share of the S&P 500 rose 5.3 percent in 2013, according to FactSet. That resulted in an average cash bonus of $1.9 million, a jump of 12.6 percent from the previous year.

The 8.8 percent increase in total pay that CEOs got last year dwarfed the average raise U.S. workers received. The Bureau of Labor Statistics said average weekly wages for U.S. workers rose 1.3 percent in 2013. At that rate an employee would have to work 257 years to make what a typical S&P 500 CEO makes in a year.

"There's this unbalanced approach, where there's all this energy put into how to reward executives, but little energy being put into ensuring the rest of the workforce is engaged, productive and paid appropriately," said Richard Clayton, research director at Change to Win Investment Group, which works with labor union-affiliated pension funds.

Information for this article was contributed by Chris Bahn of the Arkansas Democrat-Gazette.

Business on 05/28/2014

http://www.arkansas…">AP Interactive: Executive compensation in 2013

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