The average value of new stock option awards for CEOs fell 41% to $2 million between 2001 and 2003, while the average value of stock option awards for non-executive employees dropped 51%, to $2,037 per employee, according to a study on executive pay covering 1,000 companies released today by Watson Wyatt.
However, for CEOs, the value of restricted stock awards increased nearly 70%, and payouts from long-term incentive plans - both awards most non-executive workers don't receive - increased more than 50% to help offset the decline, according to a news release from Watson Wyatt. Including these increases, the average total value of these three pay elements declined roughly one-third to $3 million in 2003 from $4.6 million in 2001.
For non-executive workers, the average number of employee stock options companies granted during that period fell 30%, to 219 shares per employee in 2003, from 313 shares in 2001.
The study found that companies with "high CEO stock ownership levels had annualized total returns to shareholders of 8.9% over the last three years, compared with 5.4% for companies with lower levels of executive ownership."
"While the value of new stock option awards should level off in 2004, we expect more companies will turn to restricted stock and other long-term incentive programs," Ira Kay, national director of compensation consulting at Watson Wyatt, said in the release. "But shareholders, the media and the SEC will keep up the pressure on boards and management to develop programs that motivate and retain executives and employees."
