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  2. ECONOMY
April 13, 2017 01:00 AM

CEO compensation rises 6% in 2016

Meaghan Offerman
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    The median total compensation of CEOs rose 6% in 2016, up from the 4% increase in 2015, said a Thursday analysis by Willis Towers Watson.

    The firm analyzed the summary compensation tables in the proxy statements of 365 companies in the Standard & Poor's 1500 index filed as of March 31.

    The moderate increase in total compensation was largely driven by uneven corporate performance, annual bonuses that rose a median 5%, and a sharp decline in the value of stock options exercised (55% at the median), said Willis Towers Watson in a news release about the analysis.

    Some 59% of the companies analyzed paid annual incentive awards to CEOs at or above target levels in 2016, compared to 58% in 2015. CEO salaries rose 2% in 2016, following a 2% increase the previous year.

    “The modest increase in CEO pay should come as no surprise in view of the relatively lackluster financial performance of companies in many sectors of the economy in 2016,” said R.J. Bannister, leader of Willis Towers Watson's executive compensation consulting practice in North America, in the news release. “A strong second half offset a weak first half, resulting in generally flat to moderate performance improvement over several performance metrics.”

    “With signs that economic conditions may improve this year, along with discussions in Washington surrounding tax reform and possible legislative efforts to repeal or limit the executive pay provisions of Dodd-Frank, companies will need to carefully monitor and manage their executive pay programs to ensure they maintain a strong link between pay and performance,” Mr. Bannister added.

    According to the release, for the 165 Russell 3000 companies that disclosed their shareholder voting results as of March 31, shareholders in support of the say-on-pay resolutions averaged 92%, about the same level of support as in the past five years of say-on-pay voting.

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