Executive compensation is a hot button topic for the legal and financial worlds these days as companies report their CEO salaries for 2013, with most of the reports coming to the conclusion that executives are overpaid and that the standards that CEOs are held to are too low to qualify them for the kinds of salaries they are rewarded. These arguments become particularly vehement as shareholder value is accounted for, and investors become more vocal about the potential devaluing of shares owed them. Coca-Cola’s executive payment plan has been in the spotlight over the past several weeks as Warren Buffet first criticized the company’s plan to reward its executives in equity amounting to $13 billion over four years. He later retracted his statements, and has cast general doubt on the ability of boards to oversee excessive executive compensation, but Coca-Cola is not alone in this publicized criticism over large CEO paychecks.
Still, even as many decry the increases in executive compensation over the last year, some data points to the decline in total CEO pay. Forbes reports that company filings for the Russell 3000 indicate that total compensation is down because of pension accruals. As interest rates rise, pension accruals go down, and this decline in pension accruals has contributed to an overall decline in total compensation, as the report notes. The Russell 3000 filings for 2014 so far have recorded a decline in average pension change to $646,000 in 2013 from $1.3 million in 2012. Because the total compensation figures — including total direct compensation plus pensions and all other compensation — are independent of executive board decisions or compensation committee decision, it is important for comparison’s sake to consider the impact of pension accruals on total compensation.