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E-MailAlex Knowlton is a Senior Research Analyst at Equilar Inc. This post is based on an Equilar memorandum by Mr. Knowlton. Related research from the Program on Corporate Governance includes The Growth of Executive Pay by Lucian Bebchuk and Yaniv Grinstein.
The compensation of chief executive officers has been under the spotlight, particularly with the initial release of the CEO-to-median-worker pay ratio disclosure requirement. As a result, CEO compensation has been dissected further than ever before. However, shareholders may feel somewhat disconnected to this information due to the large, national scale. A closer-to-home, more intricate analysis of chief executive compensation can be viewed by breaking it down by the highest-paid CEO by state. A recent study Equilar conducted with the Associated Press did just that, and analyzed the total compensation of the highest-paid CEO at public companies in 46 of the 50 states. Chief executives had to have been with a company for at least two years and the Company had to have filed a proxy between January 1, 2018 and April 30, 2018 to be included in the study.
Georgia was home of the highest-paid CEO—Frank J. Bisignano, who was awarded a total compensation of $102,210,396 in 2017. Bisignano was awarded over $30 million more than Michael Rapino of Live Nation Entertainment, which is based in California, the second highest state in the study. Though compensation has many factors that play a part in determination, the sheer size of the surrounding area of the company seems to have an effect on CEO pay. For example, six of the top ten states with the highest-paid CEOs were also in the top ten in terms of population. Nevada was the lone state to be featured with a top-paid CEO and have a population in the back half of the states.
| State | Population | Company | Executive | Total Compensation | Population Rank |
|---|---|---|---|---|---|
| GA | 10,545,138 | First Data | Frank J. Bisignano | $102,210,396 | 8 |
| CA | 39,776,830 | Live Nation Entertainment | Michael Rapino | $70,615,760 | 1 |
| NY | 19,862,512 | CBS | Leslie Moonves | $68,375,015 | 4 |
| CO | 5,684,203 | Liberty Media & Qurate Retail Group | Gregory B. Maffei | $67,622,019 | 21 |
| OH | 11,694,664 | TransDigm Group | W. Nicholas Howley | $61,023,102 | 7 |
| MA | 6,895,917 | TripAdvisor | Stephen Kaufer | $43,160,584 | 15 |
| MD | 6,079,602 | Discover Communications | David M. Zaslav | $42,247,984 | 19 |
| NV | 3,056,824 | Wynn Resorts | Stephen A. Wynn | $34,522,695 | 32 |
| PA | 12,823,989 | Comcast | Brian L. Roberts | $32,520,224 | 5 |
| FL | 21,312,211 | Roper Technologies | Briand D. Jellison | $29,158,675 | 3 |
While states in the top ten tend to have larger populations, smaller states by population generally have smaller total compensation for CEOs, evidenced by the bottom five states in the study. New Hampshire, with a population of just over 1.3 million, featured the CEO with the least amount in total compensation, at around $1.6 million. Both Dakotas, neither with a population breaching one million, were both in the bottom five in compensation as well. Utah, the 31st most populous state in America, was the largest state in the bottom five.
| State | Population | Company | Executive | Total Compensation | Population Rank |
|---|---|---|---|---|---|
| KS | 2,918,515 | Euronet Worldwide | Michael J. Brown | $3,860,972 | 35 |
| ND | 755,238 | MDU Resources Group | David L. Goodin | $3,727,609 | 47 |
| SD | 877,790 | Black Hills | David R. Emery | $3,408,005 | 46 |
| UT | 3,159,345 | Zions | Harris H. Simmons | $3,240,180 | 31 |
| NH | 1,350,575 | PC Connection | Timothy McGrath | $1,648,275 | 41 |
With respect to sector break down, CEO pay by state varies significantly. The services sector led the way in both total companies—which was 12—and the highest median total compensation for a CEO in the study at just over $27.6 million. Technology had the second highest median CEO compensation with $23.6 million and the highest median state population at almost seven million. Interestingly, every sector was represented by at least three companies except for the financial sector, which did not have a single company lead any state.
Though looking at the total compensation of chief executive officers allows for a general overview of the compensation landscape, it does not have the ability to paint in the small, minute details. By analyzing compensation at each state, the data can depict trends generally unseen on a national level. Whether it is the effect of population on the total compensation of a CEO or which sectors are represented by the highest-paid CEO in a given state, the breakdown provides insight at a more regional and local level.
Download a copy of the complete list here.
*CEO pay includes total compensation information disclosed in company proxy statements for fiscal year 2017, including salary, bonus, stock and options valued at grant date, any deferred compensation, and other compensation (including benefits and perks).
