Median CEO pay crosses $10 million in 2013

NEW YORK — They’re the $10 million men and women.

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 percent from $9.6 million in 2012, an Associated Press/Equilar pay study shows.

Last year was the fourth straight year that CEO compensation rose, following a decline during the Great Recession. The median climbed more than 50 percent 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 the Framingham, Mass.-based discount retail giant TJX Cos., the owner of TJ Maxx and Marshall’s. She earned $20.7 million last year.

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For several years, boards of directors have tweaked executive compensation to answer critics’ calls for CEO pay to be more attuned to performance. They have cut back on stock options and cash bonuses, which were criticized for rewarding executives even if a company did poorly. Boards have placed more emphasis on paying CEOs in stock instead of in cash and stock options.

The change became a boon for CEOs last year: A surge in stocks drove the Standard & Poor’s 500 index up 30 percent. The stock component of pay packages rose 17 percent to $4.5 million, on average.

‘‘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 at extraordinary levels.”

The highest paid CEO was Anthony Petrello of Nabors Industries, who made $68.3 million. His pay ballooned with a $60 million lump sum payment to buy out his old contract.


Petrello was one of a handful of chief executives who received a one-time boost because directors decided to renegotiate CEO contracts under pressure from shareholders.

The industry with the biggest pay bump was banking. The median pay of a Wall Street CEO rose 22 percent last year, on top of a 22 percent increase the year before. BlackRock chief Larry Fink made the most, $22.9 million. Kenneth Chenault of American Express ranked second, $21.7 million.

Female CEOs had a median pay package worth more than male CEOs, $11.7 million versus $10.5 million. But there were only 12 female CEOs in the study, compared with 325 male CEOs.

Like stock compensation, cash bonuses jumped last year as a result of the surging stock market and higher corporate profits. Earnings per share of the S&P 500 rose 5.3 percent in 2013, according to FactSet. That resulted in an average cash bonus of $1.9 million, up 12.6 percent.

More than two-thirds of CEOs at S&P 500 companies got a raise last year, according to the AP/Equilar study.


Investors have been vocal about executive pay since the recession. This has led to spats between directors, who propose pay packages, and shareholders, who own the company.

This month, 75 percent of Chipotle Mexican Grill’s shareholders voted against a proposed pay package for co-CEOs Steve Ells and Montgomery Moran. Ells earned $25.1 million in 2013, while Moran earned $24.3 million, a 27 percent rise in compensation for each. Chipotle spent $49.5 million on CEO pay last year, the fourth-highest in the S&P 500.

To calculate a CEO’s pay package, the AP and Equilar looked at salary, perks, bonuses, and stock and option awards, using the documents that regulators require the companies to file each year. Equilar looked at data from 337 companies that had filed their proxies by April 30. It includes CEOs who have been at the company for two years.