Executive Bonuses Keep Whirling

More corporate boards are keeping base salaries steady while adding other perks (i.e., bonus payments, stock options, restricted stock awards, long-term incentive plans), according to ERI Economic Research Institute.

The May 2007 ERI/CareerJournal.com ERI Executive Compensation Index suggests the average dollar amount of executive bonuses has increased 119.9% since 1997, while base salary for the top executives increased by just 37%.

(Apparently, not every business executive thinks like Mitt Romney.)

The study showed that compared to the same period one year ago:

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  • Base salaries. The average increase for base salaries was 0.85 percent, with the annual base salary averaging $1,281,464.
  • Annual bonus. The average company annual executive cash bonus increased by 23.63% compared to a year ago, with the average bonus sitting at $3,474,711.
  • Total cash compensation. The average executive increase (base plus bonus) was 16.53%, or an average of $4,756,357 among top executives.

At 3Com, for example, the computer networking company’s newly appointed chief financial officer, Jay Zager, is pulling in $860,000 for his first year on the job. This is due to the combination of a $400,000 salary, $260,000 bonus after his first year, and a $200,000 signing bonus. The Marlborough, Massachusetts-based company also allegedly offered 300,000 shares of restricted stock and seven-year options to buy 500,000 shares of stock.

Likewise, Eastman Kodak is offering one of its top executives a handsome bonus in recognition of “increased responsibilities,” according to a regulatory filing. Philip Faraci, the company’s president of consumer digital imaging, will receive a 15% raise (from $520,000 to $600,000 annually), as well as a bonus of up to $450,000 a year.

And in other news, minimum wage will now hit $5.85 per hour by the end of the summer (officially up 70 cents from $5.15 per hour, capping off at $7.25 per hour in 2009).

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.


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