Compensation: survey shows real change in CEO pay.

• Author: Marshall, Jeffrey
• Position: BusinessBriefs

While the beginnings of a transition were visible a year ago, a study of 350 of the largest public companies in the U.S. reveals that, in 2003, companies moved away from granting stock options to CEOs, rebalanced the long-term incentive mix for CEOs, reined in overall CEO pay and strengthened the link between CEO pay and performance.

The 2003 edition of The Wall Street Journal/Mercer Human Resource Consulting CEO Compensation Survey, which has tracked CEO pay trends in the U.S. for more than a decade, was published in April in The Wall Street Journal.

On a number of key performance measures, companies fared better in 2003 than they did in 2002, and annual CEO pay reflected this improvement. Among the 350 companies studied, revenue grew by a median 7.2 percent, to $6.2 billion; net income rose a median 19.2 percent, to $318 million; and the median one-year total shareholder return (TSR) was 26.9 percent. (By comparison, median one-year TSR was -5.9 percent in 2002.)

Correspondingly, the median CEO salary was $950,000 in 2003, up 3.8 percent over the prior year; the median annual bonus increased 6.7 percent, to $1.1 million. Median total annual compensation (base salary and bonus) was $2.1 million in 2003, up 7.2 percent.

More than one-third of the companies (121 of the 350) did not increase the CEO's salary in 2003 (compared to 132 companies in 2002), and 39 companies did not grant an annual bonus to their CEO, compared to 50 in...