Pay increases for CEOs fall below 10% in 2006

Chief executives of U.S. companies received pay increases of less than 10% last year, the slowest annual gain since 2002, a corporate-governance watchdog group found.

Median pay for CEOs rose 9.3% to $2 million in 2006, after increasing 16% a year earlier, the Corporate Library said in a statement Monday. The Portland, Maine-based group drew its findings on compensation for 944 executives from regulatory filings.

Investor groups have called for curbs on executive pay after CEO compensation tripled from 1990 to 2004, rising at more than three times the rate of corporate earnings. CEOs at 11 of the largest U.S. companies received $865 million in a five-year period while presiding over losses in shareholder value, the Corporate Library said last year.

“Given the attention CEO pay has gotten in recent years, I would expect a bigger slowdown than this,” said Paul Hodgson, author of the survey. “The popular backlash is having some impact, but we’re not at the stage where it’s being curtailed seriously.”

The biggest gains last year were among CEOs of companies included in the Standard & Poor’s 500 index, the study found. Those CEOs received a median increase of 24%, while executives of mid-size companies received 11% pay hikes and those with small firms received 7.7%, the Corporate Library said.

The highest CEO compensation in 2006 went to Leslie Blodgett of Bare Escentuals Beauty Inc., a San Francisco cosmetics company, who received $118 million as she exercised company stock options, the study said.

U.S. Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, has proposed legislation to let shareholders register disapproval of executive pay packages without the government directly regulating pay.

Frank has made his executive-pay bill a top priority since taking over the House panel in January.