CEO pay in US drops with economic meltdown
Even as India-born Sanjay Jha of Motorola took home a staggering $104.4 million pay package, the average compensation for top CEOs in the US dropped for the first time in five years with the economic meltdown.business Updated: Apr 06, 2009 11:19 IST
Even as India-born Sanjay Jha of Motorola took home a staggering $104.4 million pay package, the average compensation for top CEOs in the US dropped for the first time in five years with the economic meltdown.
The average compensation for 200 chief executives at America's largest public companies fell 5.1 percent last year to $10.8 million, according to a survey published Sunday by the New York Times and research firm Equilar.
The decline marked the first time in five years that top executives' pay packages shrank compared to the year before.
"We could begin to see a fundamental sea change in the compensation of executives," Charles M. Elson, director of the John L. Weinberg Centre for Corporate Governance at the University of Delaware, told the Times. "If shareholder value has fallen, so should the value of the executive pay package."
Last year's biggest payday went to Sanjay Jha of Motorola, who was lured away from Qualcomm in August to try to turn around Motorola's struggling mobile phone business.
Jha earned $104.4 million in total compensation, although almost all of it - $103.6 million - came from stock options and grants. Jha's co-CEO at Motorola, Gregory Brown, had a 2008 pay package that totalled $24.2 million.
Other top earners were Oracle CEO Larry Ellison, with total compensation of $84.6 million, Walt Disney's Robert Iger ($51.1 million), American Express's Kenneth Chenault ($42.8 million) and Citigroup's Vikram Pandit ($38.2 million).
The New York Times/Equilar calculations include executives' base salary, cash bonuses, perks, stock options and grants.
The biggest cash bonus of the year went to Hewlett-Packard CEO Mark Hurd, who made $23.9 million extra on top of his $1.5 million salary.
Unsurprisingly, CEOs of financial services companies saw the biggest decline in their pay cheques. The median compensation of those in the study - a group that includes troubled giants like Bank of America and Citigroup - fell 40 per cent.
But in other fields, executive pay rose. In technology, median CEO pay rose 10 per cent last year, while health care CEOs commanded highest median pay: $13.8 million.
"We are witnessing a seismic shift among top corporate earners," Equilar research manager Alexander Cwirko-Godycki told the Times.
"Wall Street and the financial sector were once at the pinnacle of the corporate world, and their pay reflected that. Because of the current crisis, we see new pay leaders emerging, particularly in health care and technology. To some extent, that probably reflects where the future strengths in this economy lie."