Regression analysis showed that 15 of the most overpaid CEOs on our list each had compensation that was at least $20 million higher than if their pay had been properly aligned with performance. When company performance is considered, the most overpaid CEOs are disproportionately overpaid. A report by the Economic Policy Institute found that value of CEO compensation has grown 52.6 percent in the recovery since 2009 using an “options- exercised” measure compared to just 29.4 percent using the “options-granted” measure. In the recent sustained bull market, it has become apparent that this figure vastly understates the amount of money that executives receive. This includes an estimated “grant date value” of equity and stock option awards. Most reports on CEO pay – including ours – use total disclosed compensation as reported by companies under SEC requirements.
Given the methodology used to calculate CEO pay, this may be under reported. Institutional Shareholder Services (ISS) ¹ reported that the median CEO pay increase last year was 6 percent among the S&P 500 companies.