For the first time, the average compensation of CEOs at the country's largest companies topped $10 million after rising more than 16 percent above the average in 1999, according to a survey conducted by executive compensation consultants Pearl Meyer & Partners.

"We're up into another digit in measuring CEO pay," said Claude E. Johnston, Pearl Meyer & Partners managing director. "We used to think of these things as resembling telephone numbers, but now they look like international telephone numbers."

CFOs earned far less than CEOs in absolute terms -- an average of only $2.77 million -- though their compensation rose by 17 percent, slightly faster than that of CEOs. Their salaries rose an average of 9 percent, but, at $507,000, salary was still a small portion of their total package.

Sixty percent of average CEO remuneration came as stock options, while salaries accounted for only 10 percent of pay. The value of their stock options rose by 28 percent while bonuses rose 20 percent. Salaries dawdled at 4 percent growth, reaching $1.13 million, just over the $ 1 million cap for corporate tax deductions for salaries.

CFOs and other top executives tended to join CEOs in taking advantage of increases in shareholder value. CFO stock options averaged $1.44 million, slightly more than half of their total pay. The percentage for chief legal officers and human resources officers was about the same.

The increases for CEOs lagged slightly behind average corporate revenue increases of 18 percent. Johnston said that it was hard to estimate the current trend in the declining stock market.

"Compensation seems to be lagging a little bit, so I suspect we're on the cusp of a new change," he said. "In companies where their equity has not performed well, they may be re-pricing stock options, but that has adverse accounting consequences ... Companies may try to make additional option grants to try to restore the incentive."

The survey was based on an early look at proxy reports to be mailed in the first half of this year. The 51 companies that responded had average revenues of $22 billion.

-- SmartPros News Staff

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