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Early Data for 2013 shows rise in CEO compensation

By now, you’ve heard all about Pay for Performance – executives’ bonuses are not predetermined anymore but instead based on the performance of the company in both the long and short-term. But by and large, shareholders have supported executives and paid them accordingly.

Here are some key statistics that show data in 2013 compared to 2012 (data from http://www.capartners.com):

  • Shareholder support at 97%, up from 95%
  • Median CEO bonus 100% of target in 2013 compared to 97% in 2012
  • 51% of executives rewarded with more than 100% of target bonus (meaning they exceeded target), compared to 47% in 2012
  • 49% of bonuses related to long-term incentives, up from 45%
  • 50% of companies modified the peer group
  • So what does the data tell us? It seems pretty evident that executive pay is rising, predominantly through meeting targets. Executive pay is also increasingly tied to the long-term success of the company, with executives rewarded for meeting long-term goals (usually over a three year period).

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    Executive Trends – 2011

    As the first year of Dodd-Frank comes to a close, we recap the major trends in executive compensation from the previous year:

    • Focus on structure, design and stability of executive contracts as economy begins to pick up
    • Closer communication with shareholders
    • Significant concern with external governance and pay for performance
    • Emphasis on accurate goal-setting and formula to measure performance

    Predictions for 2012 and beyond:

    • Pay for performance will continue to be the flavor of the day, taking up a higher percentage of overall compensation
    • Continuing efforts to streamline and improve formulas and metrics to measure performance
    • Deeper reliance on peer groups and focus on long-term incentives
    • Further attempts to eliminate inefficient pay practices
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