Total annual compensation of the five top executives of Russell 3000 companies averaged $1.6 million in 2010, up 37% from 2008, according to research by ISS Corporate Services.
The total pay was up even more at S&P 500 index companies, by an average 54% to $6.3 million, and at S&P MidCap index companies, by an average 63% to $2.9 million for the same period.
At S&P SmallCap index companies, the total pay was up 25%. to $1.4 million for the period, according to an ISS white paper: “Stocking Up: Post-Crisis Trends in U.S. Executive Pay.”
“While many companies have moved to tighten the link between pay and performance in the wake of the financial crisis, a general disconnect is evident when comparing market performance against the average pay awarded to executives in our study,” wrote its author, Subodh Mishra, ISS vice president.
“This is particularly true in the case of the S&P 500 index” for which total return was 23.5% in 2009, 12.8% in 2010 and 39.2% over the two-year period ended Dec. 31, 2010, the report said. “By comparison, pay for named executive officers at S&P 500 companies outpaced market gains … including by more than 15 percentage points over the two-year period.
“The gap is likely to remain going into the 2012 proxy season, with many companies saying they will award incentive pay at or above last year's levels despite the market, as measured by the S&P 500's performance in 2011, remaining flat.”
ISS analyzed 2,297 companies in 2010 and 2,405 companies in 2008 in the Russell 3000.
ISS defined total annual compensation as base salary, bonus, non-equity incentive plan compensation, stock awards, option awards, change in pension value and non-qualified deferred compensation earnings, and all other compensation, such as perquisites.
The paper is available at the ISS Corporate Services website.