A survey on the compensation of 300 U.S. CEOs showed much of their pay is connected to performance and the returns they deliver to their shareholders.
An annual pay survey by The Wall Street Journal found that CEO pay rose by a median of 13.5 % to about $13.6 million, about two-thirds of which was tied to performance.
Their shareholders did even better, earning a median return on their investment of 16.6%. By comparison, the average private sector employee received a 2.2% raise, according to the U.S. Labor Department.
At a time when pressure from investors has led more companies to link pay with results, the study found the 10 CEOs with the best shareholder returns were paid more in the most recent fiscal year than they were last year.
Rite Aid Corp. CEO John Standley brought the highest shareholder return (292%) and received a pay increase of 6.5% to $8.3 million. Southwest Airlines CEO Gary Kelly delivered a 126% return and got a 23.9% salary bump to $5 million.
Among the CEOs from the 10 worst performing companies, all but two received pay cuts.
Two of the 10 highest paid CEOs – Viacom Inc.’s Phillippe Dauman and General Electric’s Jeff Immelt – received pay raises despite drops in the value of their shareholders’ investments.
Dauman’s pay rose 19% to $44.3 million, while shareholder returns for the media giant were negative 6.6%. Immelt’s pay rose 88% to $37.2 million, while shareholder returns were negative 6.7%.
Even some of the companies that performed the worst still gave their CEOs hefty raises. Weatherford International PLC, an oil services company, gave CEO Bernard Duroc-Danner a 13.4% raise to $14.9 million despite a negative 26.1% return to shareholders and plans to lay off 15% of its workforce.
A Weatherford spokesperson said the CEO received a salary boost because the company’s share price outperformed industry peers when oil companies are struggling to adapt to lower crude prices. The company also met most of its performance goals, including cost cuts.
The WSJ’s study reflects CEO pay at 300 companies with at least $9.1 billion in annual revenue and a proxy statement filed by April 30. Total pay amounts include salary and annual cash bonuses, equity and other performance awards, some of which are only paid if targets are met.
