Corporate Sales Rising Faster Than Executive Pay

It may seem like executives are making too much money, but corporate revenues have had a greater increase during the past ten years compared to the increase in overall total compensation of top executives, found new executive compensation studies released today by ERI Economic Research Institute (www.erieri.com) and Career Journal.com (www.CareerJournal.com), The Wall Street Journal's free career site for executives, managers, and professionals.

The survey showed that between 1997 and August 2007, U.S. publicly-traded companies increased by 116.6% the average executive Total Cash Compensation (TCC), which includes salary, bonus, and non-equity incentive as compared to the revenue increase of 131.5% for the same ten-year period. During the same time period, Overall Total Compensation (TCC, stock options, pensions, incentives, and all other compensation) of the highest paid executives increased by 20.7% while company revenues increased by 131.5%. Both studies show average company revenues increasing faster than both Overall Total Compensation and Total Cash Compensation.

Over the last 12 months, the average top executive received Overall Total Compensation of $18,115,082 of which $4,762,307 was Total Cash Compensation (TCC). During the past year, restricted stock awards and stock options have increased by 24.8%, while Total Cash Compensation rose by 0.5%. The index continues to show a trend away from guaranteed base salary and a shift from stock options to restricted stock awards. In August 2006, the Overall Total Compensation index was lower than the 1997 index primarily due to option grants being smaller in 2006 than 1997.

More corporate boards are tying compensation packages to performance through Incentive Plans, Stock Options, Restricted Stock Awards, and Long Term Incentive Plans, said Dr. David Thomsen, Director, ERI Economic Research Institute.