Why Bonuses Went Up in 2010 – Analysis of S&P 500 Annual Incentive Plan Targets and Their Payouts

by Sabrina I. Pacifici on May 29, 2011

News release: “After two consecutive years of declining pay, 2010 saw a return to increased pay for many CEOs. Equilar’s recent research showed a 28.2 percent increase in median pay for chief executives in the S&P 500. Small- and mid-cap CEOs also saw their pay rebound by over 20 percent from 2009 to 2010. In all three S&P groups, cash bonuses saw the highest percentage increase of all the components, expanding more from 2009 to 2010 than salary, equity, or perks. To discover some of the reasons for the bonus increase, Equilar studied annual cash incentive plans and their payouts among CEOs in the S&P 500 for 2009 and 2010. Researchers took the value of the annual cash incentive payout from the Summary Compensation Table (SCT) and compared it to the target values disclosed in the firm’s most recent Grants of Plan-Based Awards Table (GPBAT). Although target values remained flat, payouts increased substantially, as goals (particularly those related to company earnings) proved much easier to hit.”

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