It’s hard out here for CEOs. According to preliminary results from a new study by The Wall Street Journal and Hay Group: “Despite fairly significant gains in companies’ profit and revenue, total direct compensation for 65 CEOs in place at least two years rose just 1.4% last year.”
This figure is down from an 11% in 2010. Reasoning for the CEO compensation decline is that pay is being more directly tied to performance. Whereas before, “directors would often overlook missed targets and award big bonuses anyway.” Now, however, investors and the Securities and Exchange Commission aren’t looking the other way.
These preliminary results are drawn from a survey of 75 companies with annual revenue greater than $5.9 billion. A larger report of 300 companies is slated to be conducted this spring.
Here’s an example:
Athletic-gear maker Nike Inc. posted a 10% increase in revenue and a 12% rise in net income in the fiscal year ended May 31, 2011. But the company missed three-year targets for revenue and per-share earnings that had been set in 2008, so CEO Mark Parker received a smaller bonus, driving his total compensation down 5.8%, to $12.7 million.