The pressure on US companies to justify the compensation package of its top brass in the aftermath of the global financial crisis reflected in the chief executives' bonus payouts median, which fell over 12 per cent in 2009.
According to a report by executive compensation research firm Equilar, the median total bonus payouts for chief executives fell by 12.6 per cent from 2008 to 2009, dropping from USD 930,133 to USD 812,799.
Total bonus payouts included both performance-based bonuses and discretionary cash awards.
Equilar analysed results for a total of 232 companies reporting compensation data for fiscal years ending between June 30, 2009- December 31, 2009.
It found that performance-based bonus payouts fell from a median of USD 713,108 in 2008 to a median of USD 639,950 in 2009, a drop of 10.3 per cent.
The median value of discretionary cash awards declined by 20.5 per cent from USD 860,000 in 2008 to USD 683,323 in 2009.
CEOs in certain industries were hit harder than their peers in other fields. For capital goods and technology companies, the median total bonus payout for CEOs from 2008 to 2009 decreased by 41.3 and 53.2 per cent, respectively.
In contrast, median total bonus payouts for Services providers grew by 21 per cent.
During 2009, while many CEOs had their bonus payouts decreased, some executives did not receive a bonus at all. The total number of CEOs receiving bonus payouts fell by 3.1 per cent from 2008 to 2009, the report said.
It further noted that in an attempt to align executive pay with performance, many companies have traded in previous compensation practices for a more performance-based mix.
Many firms are also resorting to pay bonuses in equity --a method by which companies can conserve cash. Besides, reducing cash expenses, equity-based bonus awards can be used as a retention incentive and to align executives’ interests with shareholders’, the report said.