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Propelled by a soaring stock market, the median pay package for a CEO rose above eight figures for the first time last year.
The head of a typical large public company earned a record $10.5 million, an increase of 8.8 per cent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
Last year was the fourth straight that CEO compensation rose following a decline during the Great Recession. The median CEO pay package climbed more than 50 per cent over that stretch.
A Chief Executive now makes about 257 times the average worker’s salary, up sharply from 181 times in 2009.
The best paid CEO last year led an oilfield-services company. The highest paid female CEO was Carol Meyrowitz of discount retail giant TJX, owner of TJ Maxx and Marshall’s.
And the head of Monster Beverage got a monster of a raise.
Over the last several years, companies’ boards of directors have tweaked executive compensation to answer critics’ calls for CEO pay to be more attuned to performance.
They’ve cut back on stock options and cash bonuses, which were criticised for rewarding executives even when a company did poorly.
Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options.
The change became a boon for CEOs last year because of a surge in stocks that drove the Standard & Poor’s 500 index up 30 per cent. The stock component of pay packages rose 17 per cent to $4.5 million.
“Companies have been happy with their CEOs’ performance and the stock market has provided a big boost,” says Gary Hewitt, director of research at GMI Ratings, a corporate governance research firm.
“But we are still dealing with a situation where CEO compensation has spun out of control and CEOs are being paid extraordinary levels for their work.”
The highest paid CEO was Anthony Petrello of oilfield-services company Nabors Industries, who made $68.3 million in 2013. Petrello’s pay ballooned as a result of a $60-million lumpsum that the company paid him to buy out his old contract.
Nabors Industries did not respond to calls from The Associated Press seeking comment.
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