Median CEO pay for largest companies hits record in ’17

CEO pay is up — yet again. A booming stock market and bulging equity awards propelled the median 2017 compensation for CEOs of the 100 largest companies to the highest figure in 11 years, according to a new analysis.

The report, released Wednesday by executive compensation and governance research firm Equilar, examines pay of the 100 largest public companies by revenue, and comes in advance of broader CEO pay rankings that typically arrive later in the spring and analyze the companies of the entire Standard & Poor’s 500-stock index. While the median pay increase for CEOs was slightly lower than the year prior, at 5 percent instead of 6 percent, the median CEO pay package was valued at $15.7 million, the first time it notched above 2016’s previous high of $15 million. Equilar has run the analysis since 2007.

Dan Marcec, Equilar’s director of content and communications, said the number was not surprising given that the majority of CEO pay is made up of stock grants and 2017 was a banner year for market performance: The S&P 500 index saw a nearly 20 percent climb.

“The number shows us, frankly, that we’re seeing more of the same,” he said. “We’ve seen continued increases over the past seven or eight years and it’s consistent with a bull market. The higher stock prices are on the whole, the higher CEO compensation is going to be.”

New to Equilar’s analysis is the inclusion of a CEO-to-worker pay ratio for each company, thanks to a U.S. Securities and Exchange Commission rule that went into effect this year. The rule requires publicly traded companies to release a ratio of what their CEOs make in comparison to their median paid worker. For the 100 largest companies, the ratios tend to be far higher than the broader market, with a median of 235-to-one, compared with 72-to-1 for companies in the Russell 3000 index that have reported their 2017 numbers so far.

In other words, CEOs of the largest companies tend to get paid a lot more than others. “This list is always kind of the high water mark for what we see,” Marcec said. “Most of these are fairly recognizable, multinational companies that are complex. It doesn’t seem surprising that they would be on the high end of the pay scale for these jobs.”

Each year, the list produces some eye-popping numbers in part because CEO pay packages are valued on the date new stock awards are granted. As a result, multi-year grants that CEOs only get access to over time can bulk up the size of a CEO’s pay package one year, only to see the number plummet — albeit still to relatively high numbers — the following year.