Despite corporate scandals and a declining stock market, CEOs of large companies got a median pay raise of 9.5 percent last year, according to a study.

Median income for top executives of 1,019 public companies grew to $1.2 million, according to the Corporate Library, an independent research group. That figure includes salary, bonus and other direct payments.

But total compensation, driven by a large number of CEOs exercising stock options, grew even more. The most spectacular example was the CEO of Tenet Healthcare, who in 2002 exercised 3 million shares for a $111 million profit, pushing his total compensation to $116 million, compared to $3 million in 2000.

While some adjustment was expected with improvement to the economy after a bad year in 2001, the raises showed real increases over 2000 compensation levels, said Paul Hodgson, senior research associate at the Corporate Library and principal author of the study.

Top executives got raises even while their own companies experienced stagnant profits. The Standard & Poor’s 500-stock index, a broad indicator of the market, dropped 23 percent in the same year.

Corporate scandals at Enron, WorldCom and other places were connected with compensation abuses, leading observers like the Web site to expect corporations to rein in CEO salaries.

“I have to admit to being extremely surprised by the results I came up with–I was expecting a flat year,” Hodgson said in a story on the Web site. “There seems to be a disconnection between the performance of companies and the movement of pay within those companies.”

And while critics of excessive executive pay look to larger companies to set an example, CEO compensation grew faster at the biggest companies. Total compensation for top executives in the S&P 500 increased by an average of 63 percent, to $6.4 million.

Long-term payouts have become a standard way for companies to reward their chief executives at a time when a rocky market has made the more traditional stock option awards less attractive.

“Clearly when it comes to performance-based awards, there needs to be some very direct and measurable quantitative criteria,” Ann Yerger, director of research at the Council of Institutional Investors, which represents large pensions and other funds, told the Washington Post. “And even that can be risky. What’s the appropriate amount to pay based on the return? There is no magic formula or strategy. Our members have no problem with large payments if they are really based on sustainable long-term performance.”

Regardless of lower profit margins and mega companies biting the dust due to scandal, many feel executives should still be rewarded.

“I think it’s an excellent turn of events,” Judith Fischer, managing director of Executive Compensation Advisory Services, told the Post. “For the last few years too much corporate effort has been spent focusing on the share price rather than on the company’s overall well-being.”

Some CEOs showed a sense of altruism by taking a pay cut in keeping with their company’s cost-cutting measures. The CEO at Rational Software took a 50 percent decrease in base salary. The CEO at Converse Technology waived not only most of his salary but also a $1.5 million bonus.

While lauding a few companies for adopting policies indicating that boards realize that changes must be made, Hodgson’s report said other compensation practices “should be unthinkable in the wake of the scandals of 2002.”

The largest increase in base salary went to Tupperware’s E.V. Goings, who got a 44 percent raise, from $627,000 to $907,000. The largest base salary went to Viacom’s Sumner Redstone, who earned $3.6 million in base salary and a total annual compensation exceeding $20 million.

Disney’s Michael Eisner and American International’s Maurice Greenberg tied for the biggest hike in total annual compensation, from $1 million to $6 million, or 500 percent.

Bob Allen is managing editor of Jodi Mathews is news writer.

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