Executive Bonuses Increase Over 100%

Rather than continually increase base salaries, the trend is for companies to tie executive compensation to performance, according to the May 2007 Executive Compensation study released by the Economic Research Institute and CareerJournal.com, The Wall Street Journalís free career site for executives, managers and professionals. The study found that the average dollar amount of executive bonuses increased 119.9 % since 1997, while base salary for the top executives increased by 37%. Companies are keeping base salaries relatively steady and providing additional compensation in the form of bonus payments, stock options, restricted stock awards, and long term incentive plans.

Top executives in the United States saw the average dollar amount of their 2007 Total Compensation Package increase by 16.5% compared to May 2006 levels. Base compensation remained fairly steady, with an increase of 0.85% compared to the same period one year ago. However, the average company annual executive cash bonus increased by 23.63% compared to a year ago, according to the May 2007 Executive Compensation Index.

ìExcessive executive compensation has been a hot topic in Washington, D.C. and the data shows some shifting away from base pay and annual cash bonus,î said Dr. David Thomsen, Director, ERI Economic Research Institute. ìMore corporate boards are tying compensation packages to performance through Incentive Plans, Stock Options, Restricted Stock Awards, and Long Term Incentive Plans.î

The May 2007 ERI/CareerJournal.com ERI Executive Compensation Index results are:

Base Salaries
The average increase in base salaries was 0.85% during the last year. Among all the top executives, the annual base salary averaged $1,281,464.

Annual Bonus
The average executive increase in bonus amounts was 23.63% during the last year. Among all top executives, the annual bonus averaged $3,474,711.

Total Cash Compensation
The average executive increase in Total Cash Compensation (base bonus) was 16.53 %. Among all top executives, the average annual Total Cash Compensation averaged $4,756,357.

Total Cash Compensation Change Since 1997
The May 2007 Company Average Index of Total Cash Compensation is 204.2, using the 1997 level base of 100. Since 1997, the Average Company Percent increase in Total Cash Compensation for the highest paid executives is 104.2%.

Compensation and Revenue Changes Since 1997
The Average Index of Corporate Revenue is 219.8, using the 1997 level as a base of 100.0. Since 1997, the Average Company Percent increased in Revenues is 119.6%. This compares to the increase of 104.2% in the Index of Total Cash Compensation.

A review of the year-to-year data shows a change in pattern from 1997 to 2007. Prior to 2002, compensation was rising at a faster rate than revenues, but in more recent years, executive compensation is rising more slowly than corporate revenues. The May 2007 Index shows a continuation of this trend.

The Total Cash Compensation Index reflects data from a representative group of 44 publicly traded companies randomly selected from the approximately 6,500 companies that report compensation data to the Securities and Exchange Commission (SEC). The May 2007 index has been adjusted to reflect merger activity which has occurred since the inception of the index. The Index has tracked pay for the highest paid executive in this group of companies since 1997.