Why CEOs are taking home more cash

April 21, 2015, 4:22 PM UTC
Photograph by Kim Hong-Ji — Reuters

Cash compensation for CEOs is on the rise thanks to stocks up near historic levels, The Wall Street Journal reported Tuesday. CEOs received 37.3% of their total compensation in the form of cash, a trend that rose at the fastest rate in “at least four years,” based on early proxy filings by the Hay Group, the Journal said.

The article continued:

The resulting shift in compensation in part reflects concern among increasingly vocal shareholders that their investments could be devalued by companies issuing new stock to support big equity awards, compensation consultants said. They also indicate that company insiders—like some investors—are worried the market may be nearing a top.

The Hay Group survey examined 50 companies with over $8.7 billion in revenue that filed annual proxy statements by March. “Total pay was up by a median 6.9% to $12.2 million, bigger than the 4.3% increase a year earlier,” according to the Journal. Whereas during the financial crisis, companies gave CEOs more in restricted shares or stock options, the articled added:

Cash was the fastest-growing component of pay for the surveyed CEOs last year. Their salaries and annual bonuses rose by a median 7.8%, up sharply from the previous year’s 1.2% and a decline in the year before that.

Among the CEOs receiving a surge in cash pay: Walt Disney (DIS). CEO Robert Iger saw his compensation increase $12.2 million in 2014 to $46.5 million, most of which was cash. His pay is based almost entirely on performance, a Disney spokesman told the newspaper. His bonus rose 68% to $22.8 million.

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