On the heels of the proposed Securities and Exchange Commission (SEC) rule that would likely put pressure on companies to slow the pay increases of their CEOs, a new survey reveals that CEO pay in North America increased 8.47 percent among more than than 2,200 North American CEOs in 2012.
And for the first time, GMI Ratings’ 2013 CEO Pay Survey identifies two CEOs that earned more than $1 billion in a single year, as well as the first time all ten CEOs earned at least $100 million. In 2012, Facebook CEO Mark Zuckerberg earned $2,278,668,214, and Kinder Morgan, Inc. CEO Richard D. Kinder earned $1,116,685,089.
The report findings are based on an analysis of 2,259 North American publicly traded companies and includes over 2,250 CEOs whose tenure spanned the past two consecutive years.
- S&P 500 pay increased 19.65 percent at the median.
- Median realized compensation increases were far more prominent at larger companies. While the Russell 2000 saw a 7.62 percent increase at the median, the figure more than doubles to 15.74 percent in the Russell 1000.
- Median annual compensation increased far more in the Russell 2000 (4.13 percent) than in the Russell 1000 (1.80 percent) or the S&P 500 (0.29 percent).
- Industry segments experiencing the largest increases in CEO pay included construction materials; office electronics; personal products; hotels, restaurants and leisure; and household products industries.
“While the companies in this year’s list have performed well over the past three and five year periods in terms of shareholder return, generally speaking, it’s the sheer size and volume of equity awards granted to these top executives that catapults their total compensation to astronomical levels,” said Greg Ruel, senior research analyst and author of the report.
Since the financial crisis of 2008, executive compensation has come under intense scrutiny, and for good reason. According to the Economic Policy Institute, executive compensation is now more than 277 times an average worker’s pay compared with just 20 times in 1965.
In September, SEC regulators proposed a rule that will require public companies to make CEO compensation more transparent, which has drawn some controversy. The proposed rule was originally proposed in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and it mandates that public companies to report the wage gap between their CEOs and rank-and-file employees.
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