For further information: Charles Peck
The Conference Board
(212) 339-0404, [email protected]
For Immediate Release Release #4451A
CEO COMPENSATION CONTINUES TO RISE INSURANCE INDUSTRY CHIEF EXECUTIVES ARE HIGHEST PAID
Despite global financial uncertainty, top executive compensation topped $1 million in five major industries in 1997, The Conference Board reports today in its annual executive compensation report.
The report covers 1,711 companies in 14 major industries. In addition to total current compensation (salary plus bonus) of the top five executives, for the first time the study reports their total compensation, which includes the annual value of stock options and other long-term incentives.
Median CEO total compensation was highest in the insurance industry at $1,275,000. The four other industries breaking $1 million were: communications, $1,254,000; telecommunications, $1,141,000; energy, $1,020,000; financial services, $1,009,000. For the other nine industries, median CEO total compensation was: $908,000 for utilities; $886,000 for manufacturing; $846,000 for diversified service; $833,000 for commercial banking; $710,000 for transportation; $704,000 for wholesale trade: $675,000 for computer services; $606,000 for construction; and $600,000 for retail trade.
"The increasing use of such long-term incentives as stock options on top of current compensation continues to push top executive pay to ever higher levels," says Charles Peck, Conference Board compensation specialist. "Since stock prices are widely regarded as a prime indicator of corporate performance, more and more companies are using stock to tie executive compensation to the market performance of the company's shares." The closest link between executive pay and annual profitability is the yearly bonus. Financial services had the largest CEO median bonus at 114% of salary, although this was only about one-third of last year's average bonus of 337% of salary. Among the other industry groups, the 1997 bonus ranged from 90% of CEO salary in computer services, construction and telecommunications to 54% in utilities.
Source: Top Executive Compensation in 1997 Report No. 1227-98-RR The Conference Board
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