Cash may be king in the current business environment, but it’s a smaller part of the king’s or queen’s pay.
A report released by The Conference Board showed that companies are increasing the stock component of their chief executive officers’ compensation mix while decreasing cash. The report added that it expects executive compensation to shrink in the face of the recession.
The Conference Board Top Executive Compensation study found that companies in almost all of the 22 industries surveyed were reallocating ceo compensation toward stock as opposed to cash salary, bonuses and stock options.
Among 137 ceo’s in the retail trade industry tracked in the survey, the median cash compensation was $1.2 million and the median total compensation package was $2.7 million. Among the 19 executives at textile and apparel firms The Conference Board studied, the median cash compensation was $1.6 million and the median total was $2.6 million.
The figures for retailers were unchanged from the prior year. For textile and apparel executives, however, cash compensation rose 0.8 percent while total compensation was up 8.7 percent.
The report is based on data from proxies regarding fiscal 2007. The Conference Board said it expects median ceo compensation based on revenue performance to fall during the current recession. The group added, though, that it will not know for sure until next year’s proxy data are released, as the recession did not start until December 2007.
In construction, the one sector showing a decline in compensation, total compensation fell 25.6 percent while cash compensation dropped 22.4 percent. The biggest increase in total compensation was for ceo’s in insurance — 14.8 percent — as cash compensation soared 34.4 percent.
“Companies must assume their top executives’ compensation will come under greater scrutiny from within and without,” said Conference Board research director Linda Barrington. “The financial market crisis and U.S. recession have contributed to eroding public trust in business leadership.”
While the report found cash lost ground in the total compensation mix, the amount of cash the median ceo took home increased in two-thirds of the industries profiled in 2007.
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