They’re the $10-million men and women.
Propelled by a soaring stock market, the median pay package for a chief executive rose above eight figures for the first time last year. The head of a Standard & Poor’s 500 company earned a record $10.5 million, an increase of 8.8% from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
Last year was the fourth straight that CEO compensation rose after a decline during the Great Recession. The median CEO pay package climbed more than 50% over that stretch. A chief executive now makes about 257 times the average worker’s salary, up from 181 times in 2009.
The best-paid CEO last year led an oil field services company. The highest-paid female CEO was Carol Meyrowitz of discount retail giant TJX, owner of TJ Maxx and Marshall’s. And the head of Monster Beverage got a monster of a raise.
Over the last several years, companies’ boards of directors have tweaked executive compensation to answer critics’ calls for CEO pay to be more attuned to performance. They’ve cut back on stock options and cash bonuses, which were criticized for rewarding executives even when a company did poorly. Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options.
The change became a boon for CEOs last year because of a surge in stocks that drove the S&P 500 index up 30%. The stock component of pay packages rose 17% to $4.5 million.
“Companies have been happy with their CEOs’ performance, and the stock market has provided a big boost,” said Gary Hewitt, director of research at GMI Ratings, a corporate governance research firm. “But we are still dealing with a situation where CEO compensation has spun out of control and CEOs are being paid extraordinary levels for their work.”
The highest-paid CEO was Anthony Petrello of oil field services company Nabors Industries, who made $68.3 million in 2013. Petrello’s pay ballooned as a result of a $60-million lump sum that the company paid him to buy out his old contract.
Nabors Industries did not respond to calls seeking comment.
Petrello was one of a handful of chief executives who received a one-time boost in pay because boards of directors decided to renegotiate CEO contracts under pressure from shareholders. Freeport-McMoRan Copper & Gold CEO Richard Adkerson also received a one-time payment of $36.7 million to renegotiate his contract. His total pay, $55.3 million, made him the third-highest-paid CEO last year.
The second-highest-paid CEO among companies in the S&P 500 was Leslie Moonves of CBS. Moonves’ total compensation rose 9% to $65.6 million in 2013, a year when the company’s stock rose nearly 70%.
“CBS’ share appreciation was not only the highest among major media companies, it was near the top of the entire S&P 500,” CBS said in a statement. “Mr. Moonves’ compensation is reflective of his continued strong leadership.”
Media industry CEOs were, once again, paid handsomely. Viacom’s Philippe Dauman made $37.2 million while Walt Disney’s Robert Iger made $34.3 million. Time Warner CEO Jeffrey Bewkes earned $32.5 million.
The industry with the biggest pay bump was banking. The median pay of a Wall Street CEO rose 22% last year, on top of a 22% increase the year before. BlackRock chief Larry Fink made the most, $22.9 million. Kenneth Chenault of American Express ranked second with earnings of $21.7 million.
Like stock compensation, performance cash bonuses jumped last year as a result of the surging stock market and higher corporate profits. Earnings per share of the S&P 500 rose 5.3% in 2013, according to FactSet. That resulted in a median cash bonus of $1.9 million, a jump of 12.6% from the prior year.
More than two-thirds of CEOs at S&P 500 companies received a raise last year, according to the AP/Equilar study, because of the bigger profits and higher stock prices.
To calculate a CEO’s pay package, the Associated Press and Equilar looked at salary as well as perks, bonuses and stock and option awards, using the regulatory filings that companies file each year. Equilar looked at data from 337 companies that had filed their proxies by April 30. It includes CEOs who have been at the company for two years.
Among other findings:
• Female CEOs had a median pay package worth more than their male counterparts, $11.7 million versus $10.5 million for males. But there were only 12 female CEOs in the AP/Equilar study compared with 325 male CEOs that were polled. TJX’s Meyrowitz was the best-paid female CEO in the AP/Equilar study. She earned $20.7 million last year.
• The CEO who got the biggest bump in compensation from 2012 to 2013 was Rodney Sacks, the CEO of Monster Beverage. Sacks earned $6.22 million last year, an increase of 679%. Monster’s board of directors awarded Sacks $5.3 million in stock options to supplement his $550,000 salary and $300,000 cash bonus.