How AP and Equilar calculated the CEO’s salary

For its annual analysis of CEO compensation, The Associated Press used data provided by Equilaran executive data company.

Equilar reviewed regulatory documents detailing the compensation of 340 executives. Equilar looked at companies in the S&P 500 Index that filed proxy statements with federal regulators between January 1 and April 30, 2022. To avoid distortions caused by signing bonuses, the sample only includes CEO in place for at least two years.

To calculate CEO compensation, Equilar adds salary, bonuses, benefits, stock awards, stock option awards, and other compensation components.

Equity awards can be either time-based, which means CEOs have to wait a certain amount of time to get them, or performance-based, which means they have to meet certain milestones before they get them. Stock options generally give the CEO the right to buy stocks in the future at the price they are trading at when the options are granted. All aim to link CEO pay to company performance.

To determine the value of stock and option awards, Equilar uses the value of an award on the day it was granted, as recorded in the proxy statement. Actual values ​​in the future may vary significantly from what the company estimates.

Equilar calculated the median salary for CEOs in 2021 in the survey to be $14.5 million. This is the midpoint, which means half of the CEOs earned more and the other half earned less.

Here’s a breakdown of the 2021 salary vs. the 2020 salary. Because the AP looks at median numbers, the components of CEO compensation don’t add up to the total.

—Base salary: $1.2 million, up 8%

—Bonus, performance-based cash rewards: $2.8 million, up 59%

—Benefits: $181,923, up 1%

—Equity awards: $7.7 million, up 14%

—Option grants: $0 (More than half of companies granted no option grants. The average option grant was valued at $3.5 million.)

—Total: $14.5 million, up 17%