Business giants have a varied array of methods to show their appreciation to their leaders. Therefore, executive pay is a difficult task to measure and compare. More exactly, boards don’t limit themselves to financial compensation. They extend the perks of being a chief executive operator through stock options and grants. The complexity of these options arises when these ownerships are returned not instantly but in a matter of years. Therefore, let’s take a look at how reports succeeded to measure CEO rankings in 2016.
CEO Rankings Do Not Limit Themselves to the Base Salary Value
Equilar is an executive compensation data company that has just managed to release a new report with CEO rankings for 2016. The study took into consideration only players that are working at publicly-traded companies. Moreover, the only eligible executives were those with more than $1 billion in revenue. Given the complexity of executive pays, the report researched the value of stock option rewards, security expenses, salary, and cash bonuses.
The data firm extracted most of its information necessary for the study from summary compensation tables. These are displayed in the proxy statements of all companies. Therefore, the research started off from the sum of base salary. From this point, analysts added performance-based and discretionary cash compensations, the value of stock, option awards, benefits, and perks.
Wherever the grant-date values failed to be included in option rewards, Equilar measured the stock option value by resorting to the Black-Scholes method. This is a widely acclaimed practice which together with the assumptions of the company provided a comprehensive view for the executive pay.
Out of 200 Business Companies, There Were 30 Tech Giants
However, based on the fact that stock prices will always fluctuate, the research firm had to take this volatile nature in consideration. Therefore, the methodology dictated the study to measure equity awards in the fiscal year they were issued.
Out of the list of 200 best-paid CEOs, there were 30 CEO rankings in the tech domain. Therefore, the first five highest-paid leaders in this industry are Mark Hurd at Oracle, Safra Catz at Oracle, Bobby Kotick at Activision Blizzard, Meg Whitman at Hewlett-Packard Enterprise, and Ginny Rometty at IBM.
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