Value of CEO Equity Holdings Down Over 50 Percent for 2008

Value of CEO Equity Holdings Down Over 50 Percent for 2008

January 15 2009

CEOs at the largest U.S. corporations as a group lost a whopping $54 billion dollars over the most recent fiscal year.  These losses by CEOs of 175 major corporations amounted to 50 percent of the value of their total holdings at the median.  The median value of individual CEO total equity holdings, which includes shares owned outright, exercisable and unexercisable option gains, and unvested restricted and performance shares, fell from $60.9 million at the beginning of the period to $29.5 million at year end.  Over the same period, these companies experienced a median decline in stock price of 37 percent.  These findings are based on a recently completed study by Steven Hall & Partners, an independent executive compensation consulting firm.

“Equity compensation has long been viewed as the most direct approach to linking the interests of executives with those of their shareholders,” commented Steve Hall, Managing Director of Steven Hall & Partners.  “The study confirms this total alignment, and underscores the dramatic decline in CEO personal wealth alongside that of their stockholders, employees and Board members.”

“While such linkage is appropriate and desirable, prudent Boards are undertaking a comprehensive review of compensation programs to ensure that these programs are effective in motivating management to restore and grow future shareholder value as well as retaining critical leadership talent during this tumultuous period.”

This data excludes terminated CEOs who are falling from office at an accelerating pace.

“Either in or out of office, CEO well-being, along with that of other employees, stockholders and directors, is in a downward spiral,” according to Steven Hall.

About the Study
The study included Chief Executive Officers of 175 publicly traded companies in the Fortune 200.  The study excluded CEOs at companies that are no longer traded publicly and companies that were acquired or taken private.  The study also excluded CEOs with disclosed retirement or resignation dates.  Amounts are calculated for the period beginning at each company’s respective fiscal year end (typically December 31, 2007) and ending December 31, 2008, using equity holdings as disclosed in the companies’ most recent proxies.  Values do not reflect changes in equity holdings occurring after the disclosure of the most recent proxy.  Steven Hall & Partners intends to update the study on a quarterly basis.

Press Release: Value of CEO Equity Holdings Down Over 50 Percent for 2008