NEW YORK – Brian T. Moynihan, who runs Bank of America Corp., the second-largest U.S. lender by assets, was among a group of underpaid CEOs last year, according to a study by pay expert Graef Crystal.
At least 99 companies in the Standard & Poor’s 500 Index paid their CEOs at or below what Crystal calls their “going rate” last year, according to his study, which tracked 177 firms in the index. Moynihan, 54, was paid $13.1 million in 2013, 30 percent below what Crystal calculated as his going rate.
Chief executives typically receive boosted pay when their company’s performance improves, Crystal said. When performance stalls, compensation doesn’t always follow suit. Some U.S. companies have been able to tie pay to performance better than others – and improvement at those firms is happening at a “glacial pace,” Crystal said.
“If you go down the aisle at the executive-pay supermarket, the quality relationship to price is not as robust as in a regular supermarket,” Crystal, 79, said in a phone interview from his home in Las Vegas. “You can pick up someone of very good performance for less than someone with very poor performance.”
For the study, Crystal developed his so-called going rate, or what each of 177 chief executives would be paid on average based on his or her company’s sales, total return versus the S&P 500 and number of years they have served. He chose S&P 500 companies with a fiscal year ended Dec. 31, 2013, that have filed 2013 proxy statements as of March 28, and whose CEO has served for at least one year.
He then compared each going rate to the company-reported CEO pay in their summary compensation tables and compiled the deviations between those numbers.
The study used information from the U.S. Securities and Exchange Commission-mandated summary compensation table, which reports some awards in the year they’re granted rather than for the year they’re earned. Some awards are restricted, vesting and paying out over a set time frame, and the receipt of others may depend on future performance goals. The summary compensation table also counts changes in pension and the value of perks.