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2016 Executive Pay Movements: Industry and Company Size - CompArchive

2016 Executive Pay Movements: Industry and Company Size

2017-06-05 - 3:38 pm
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Below is a look at year-over-year movements in total pay for CEOs, CFOs, and other named executive officers sorted by company sector and revenue size. This data is taken from the CompArchive executive compensation database and represents more than 4,000 companies. A few key findings:

  1. The median total pay increase for CEOs among companies of all revenue sizes and industries was +5.3%; for CFOs, +5.0%; and for other executive roles: +3.5%
  2. Pay movements varied significantly across industry sectors: The median increase in CEO pay in the Basic Materials sector was +13.9%, while the median pay movement was negative, at -0.3%, for CEOs in the Energy sector
  3. These sector differences do not appear to be correlated with stock performance. 2016 market performance was highest in the energy sector, which had some of the least positive pay outcomes for CEOs and CFOs
  4. Pay movements exhibit a weaker correlation with company revenue size than with industry sector. For CEOs and other non-CFO executive roles, the largest pay increases occurred at companies with $2B – $8B in annual revenue. For CFOs, the largest pay increases occurred at companies $0.5B – $2B in revenue
CEO pay movements

The table above illustrates median movements in CEO total pay by revenue and industry sector, excluding companies that underwent a CEO transition in the last fiscal year. The industry sectors are ranked in order of their overall median pay movements.

Pay increases are broadly similar (between +4% and +6% at median) among the various company revenue size brackets when industry sector is ignored, with an overall trend towards higher pay increases at larger companies.

The rightmost column depicts 2016 total shareholder return (TSR) for the S&P 500 index fund tracking the given sector. TSR data is taken from Novel Investor.

CFO pay movements

CFO pay movements exhibit a similar dependence on industry sector. The rows in the table above are listed in the same order as in the CEO table, for comparison. The color coding suggests that, in general, those sectors that enacted larger CEO pay increases also tended to enact larger CFO pay increases.

Overall, CFO pay increases lagged slightly behind those of CEOs, with the general industry revenue size brackets spanning +4.4% to +5.5%.

Other NEO pay movements

Pay increases among other executive officers vary similarly with industry sector. Pay movements were lowest within the healthcare sector, where the majority of named executive job roles fall within the categories of business unit head, top medical, or top science officer.

Overall, pay movements for this group were less positive than those for CEOs and CFOs, at 3.5%, or roughly in line with typical salary budget increases over the last few years.