The median total compensation of CEOs of Standard & Poor's 500 companies reached $11.29 million in 2014, a 10.6% rise driven mostly by increases in CEO defined benefit retirement values, said a report released Thursday by The Conference Board and produced in collaboration with Arthur J. Gallagher & Co.
For Russell 3000 companies, median total compensation of CEOs was $3.89 million, an 11.9% increase driven by the double-digit returns of the equity market.
In 2014, the total return of the S&P 500 was 13.69% and the Russell 3000, 12.56%.
David M. Zaslav, president and CEO of Discovery Communications Inc., was the highest paid CEO in the Russell 3000 index in 2014 with $156 million in total compensation, up 368% from 2013, even though the company stock's total shareholder return was negative. Discovery's stock returned -23.8% in 2014. For the previous three years, Discovery's return was 18.9%.
Stock performance is based on total shareholder return as of the end of a company's 2014 fiscal year.
Mario J. Gabelli, chairman, CEO and chief investment officer-value portfolios, GAMCO Investors Inc., ranked as the second-highest paid CEO in 2014 with total compensation of $88.5 million, up 4% from the previous year. GAMCO's stock returned 2.9% in 2014 and 29.8% for three years.
In all, eight CEOs — despite their companies' negative total shareholder returns in 2014 — ranked among the top 25 highest paid CEOs in the Russell 3000. Of the eight, Joseph W. Brown, CEO, MBIA Inc., made the top-paid list with total compensation of $43.6 million, up 730% from 2013, in spite of the company stock's -6.3% three-year annualized performance, in addition to its -20.1% return in 2014.
For S&P 500 companies, excluding changes in CEO pension values from the calculation of total compensation, the median CEO total compensation in 2014 amounted to $10.1 million, only a 4.4% rise from 2013.
For Russell 3000 companies, excluding the pension value changes, the median CEO total compensation would be $3.78 million, a 10.6% rise from 2013.
The changes in pension value apply only to defined benefit plans, including actuarial-based executive supplemental retirement plans, both types of which are less common in smaller companies and the wider Russell 3000 universe. Revisions to discount rates and mortality tables that extended longevity accounted for the rise in CEO pension values and are “factors outside the control of a board of directors,” said the report, “CEO and Executive Compensation Practices: 2015 Edition.”