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March 11, 2011
CEO Compensation Increased in 2010, Link Between Corporate Performance & Pay

The average CEO total compensation increased nearly 40 percent in 2010, according to a recent Steven Hall & Partners compensation study.

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According to Steven Hall, Managing Director of Steven Hall & Partners, there were three factors contributing to the compensation increases in 2010.

"First, base salaries that were reduced or held constant in 2009 were increased in 2010. Second, cash bonuses increased +43% as a result of stronger performance. Finally, we saw a +41% increase in the value of equity compensation granted in 2010. Although executives will not realize cash gains on these awards until they are vested, they nevertheless provide both retention and a link between CEO pay and performance. Nearly 80% of the equity awarded in 2010 will only provide value if the stock price appreciates or certain performance goals are met."

Compensation Mix
Equity is the primary compensation for CEOs, comprising 43 percent of total compensation. Bonuses and other cash-based incentives represented 35 percent, while base salaries comprised the remaining 22 percent.

Compensation Trends: 2009 vs. 2010
The following CEO compensation pay elements increased in 2010:

  • Salaries +11%
  • Cash incentive compensation +43%
  • Equity compensation +41%
  • Total compensation +39%

In addition, revenues were up by 15 percent, net income was up 30 percent, and total shareholder return was 25 percent.

The Steven Hall & Partners study analyzed compensation data as disclosed in preliminary or definitive proxy statements filed in 2011 for 100 companies with revenues greater than $1 billion who had CEOs with a minimum tenure of two years.

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