The 2005 Business Week Executive Compensation "scoreboard" is now online!
BusinessWeek Online: 2005 Executive Compensation Scoreboard
In the accompanying article, Louis Lavelle writes "BusinessWeek's 55th annual Executive Pay Scoreboard found that increases were moderated in 2004 by the continued impact of corporate reform, an ongoing shareholder revolt over astronomical pay levels, and pending accounting changes that are reining in the use of stock options. Our survey of 367 CEO pay packages showed that:
-- Total CEO pay was up smartly, to an average $9.6 million -- a 15% increase from $8.3 million in 2003. But that average was skewed by the outsize pay package of our most highly compensated CEO, Yahoo! Inc.'s (YHOO ) Terry Semel, who received a package worth $120 million made up almost entirely of options. Take him out of the mix and the average raise was 11.3%, not far off the rise in shareholder gains."
An important change in this year's scoreboard is that the options are valued using the Black Scholes formula rather than merely looking at exercise gains.
This will make "pay anomalies are now easier to detect, thanks to a new methodology that BusinessWeek began using this year. Instead of counting the windfalls from option exercises as part of the annual pay package, as we have in the past, we're counting the value of annual option grants. The values are calculated using the Black-Scholes formula...."
Another important trend was the increased use of restricted shares at the expense of option grants.
"In 2004 the 200 big companies tracked by New York pay consultants Pearl Meyer & Partners granted options equal to 2% of their outstanding shares, down from 2.7% in 2001. CEOs saw the stock option portion of their pay packages decline from 51% to 37% in just one year -- in part because grants of restricted stock increased"