No need to shed a tear, but CEO pay fell in 2008 for the first time in seven years, according to a study done by the Journal.
Including the value of stock, stock options and other long-term incentives, total direct compensation for the CEOs dropped 3.4% to a median of $7.56 million. The decline was the first in seven years and only the second drop since the Journal began tracking CEO pay in 1989.
While median CEO salaries grew 4.5%, bonuses fell 10.9% as profits decreased by a median 5.8%.
You might think it’s ridiculous that in such a horrendous year CEO pay fell by so little, but bear a few things in mind. First, there’s survivorship bias. This doesn’t take into account CEOs that got canned. Second, for many CEOs, their primary form of compensation is the stock that they already own, and for almost everyone, their stock holdings ended 2008 way lower than in 2009.So despite the nominal drop in total compensation, many CEOs likely ended the year significantly poorer than they started it, which is as it should be.
What’s more, much of their pay is in stock awards, which again, means they’ve already likely received less than the nominal compensation figure.
As the Forbes billionaire list revealed, it’s obvious that the big shots took huge personal hits in 2008, even if their direct pay only dropped a little.
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