The median bonus for chief executive officers at large companies increased 13 percent last year, according to an analysis of proxy statements conducted by Watson Wyatt Worldwide, a consulting firm.
"Corporate America enjoyed a banner financial year in 2006," said Steve Van Putten, a senior executive compensation consultant at Watson Wyatt. "CEO pay moved in step with corporate earnings and stock prices, reflecting the trend toward performance-based compensation."
Median annual bonuses for CEOs rose to $2.2 million last year, a 13 percent increase. At these same companies, the median growth in earnings per share was 14 percent. Earnings per share is a commonly employed performance metric in annual incentive programs.
Base salaries grew by a more modest 4 percent to a median $1.1 million. The proxy analysis is based on 92 large companies whose CEOs remained in their positions in 2005 and 2006.
The analysis also found that the median value of CEOs' equity compensation, which includes in-the-money stock options and restricted stock awards, increased 48 percent last year to $30.2 million.