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Archive for Monday, May 10, 2010

Market gains set up CEO pay bonanza

May 10, 2010

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— America’s top CEOs are set for a once-in-a-lifetime pay bonanza.

Most of them got their annual stock compensation early last year when the stock market was at a 12-year low. And companies doled out more stock and options than usual because grants from the previous year had fallen so much in value that many people thought they’d never be worth anything.

But stock prices have generally surged ever since. Even with last week’s sharp declines, CEOs still have enormous gains on paper.

An Associated Press analysis of companies in the Standard & Poor’s 500 index shows that 85 percent of the stock options given to CEOs last year are now worth more than they were on the day they were granted. For some the value jumped by a factor of 10 or more. A year ago, after the stock market had collapsed, 90 percent of the options granted in 2008 were worth less than the original estimate, or were considered “underwater,” according to the AP’s analysis.

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