Executive bonuses more than double

Aug 23 2006 by Brian Amble Print This Article

America's highest-paid executives saw their average annual cash bonus more than double in the past year, with their total cash compensation going up by more than a third, a survey has suggested.

Research from the Economic Research Institute and CareerJournal.com found there had been a 58.8 per cent increase in average annual cash bonuses and an increase of 31.21 per cent in their total cash compensation.

The figures are based on year-to-date reporting for 2006 as compared to compensation levels reported year-to-date in 2005 for the same period.

The average annual cash bonus was $3,773,715, compared with third period year 2005 cash bonus levels of $2,375,615.

The research also collated a Total Cash Compensation Index, reflecting data from a randomly selected group of 45 publicly traded companies.

The August 2006 Index indicated that, while base salaries decreased slightly, bonuses were up sharply, resulting in an average total cash compensation per executive of $5,049,623.

The previous yearly high of $3,683,131 total cash compensation was set in 2001 prior to 9/11, the research added.

For the highest-paid executives, the average base salary stood at $1,275,908, compared with a 2005 base salary level of $1,277,944.

This reflected a 0.16 per cent decrease in base salaries, said the ERI and CareerJournal.

But average total cash compensation (base salary plus bonus) was $5,049,623, compared with a 2005 total cash compensation figure of $3,653,559.

This reflected a 38.2 per cent increase in total cash compensation over 2005 levels, it added.

The survey is further evidence of a growing reliance by American businesses on bonuses to keep talented and valued workers happy.

A study in July by Mercer Human Resource Consulting suggested U.S businesses were relying less on salary increases and more on incentives such as year-end bonuses to retain their employees.

This had the advantage of raising their compensation without raising fixed costs at the same time, it added.