The base salary for executive pay is normally stated as an annual salary, although
it is typically paid monthly or bi-weekly, similar to other salaried staff.
The pay for the Chief Executive Officer (CEO) for S&P 500 companies ranges widely,
depending on the company, the industry and the tenure of the executive. However,
since 1993, federal tax law has limited to $1 million the amount of cash compensation
that companies can deduct as an expense for tax calculations, unless the compensation
is performance-based. This limit has not been raised nor indexed to inflation. Many
large companies seek to limit their CEO base salary pay to the tax deductible amount
and then provide increased remuneration in the form of either annual bonuses or
long term incentives linked to company results. For the multitude of smaller publicly
traded companies, their CEOs’ salaries do not approach the $1 million deduction
limit.