How AP and Equilar calculated CEO pay

Staff Writer
Columbus CEO

NEW YORK (AP) — For its annual survey of CEO pay, The Associated Press used data provided by Equilar, an executive pay research firm.

This year, Equilar examined the regulatory filings detailing the pay packages of 337 CEOs. Equilar looked at Standard & Poor's 500 companies that had filed statements with federal regulators between Jan. 1 and April 30, 2014. To avoid the distortions caused by sign-on bonuses, the sample includes only CEOs in place for at least two years.

To calculate CEO pay, Equilar adds salary, bonus, perks, stock awards, stock option awards and other pay components.

Stock awards can either be gifts of stock, meaning the CEO gets it right away, or "restricted" stock, meaning the CEO has to meet certain goals before getting it. Stock options usually give the CEO the right to buy shares in the future at the price they're trading at when the options are granted. All are meant to tie the CEO's pay to the company's performance.

To value stock and option awards, Equilar uses the companies' estimates on what those stocks and options could eventually be worth when the CEO receives the stock or cashes in the options. Their actual value in the future can vary widely from what the company estimates.

Equilar calculated that the median CEO pay in 2013 was $10.5 million. That's the midpoint, meaning half the CEOs made more and half made less.

Here's a breakdown of 2013 pay compared with 2012 pay. Because the AP looks at median numbers, rather than averages, the components of CEO pay do not add up to the total.

—Base salary: $1.1 million, up 4.8 percent

—Bonus: $1.9 million, up 12.6 percent

—Perks: $164,951, up 2.8 percent

—Stock awards: $4.5 million, up 17.3 percent

—Option awards $1.25 million, down 4.2 percent

—Total: $10.5 million, up 8.8 percent