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Compensation Survey Methodology

Saturday, August 1, 2009
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To examine compensation trends for top HR executives, Human Resource Executive® magazine asked Equilar, Inc., an information-services firm specializing in executive compensation, to compile and analyze pay data from corporate filings. The data prepared by Equilar includes information for the 50 highest-paid HR executives at Russell 3000 companies.

For each HR executive, total compensation is calculated as the sum of base salary, discretionary and performance-based cash bonuses, and the grant date value of stock and option awards. Other compensation like benefits and perquisites is excluded.

Base salary and cash bonus values are taken directly from the Summary Compensation Table of each company's proxy statement. Grant date values for both service-based and performance-based stock and option awards are taken from the Grants of Plan-Based Awards Table provided by each company.

Whenever grant date values are not provided for option awards, Equilar values these grants using the widely accepted Black-Scholes methodology and the company's own option valuation assumptions.

Readers should note that grant date values represent the estimated value of new stock and option awards. Although companies disclose these values, there is no guarantee that executives will actually realize these amounts. They may earn more or less depending on stock price movements and the achievement of performance goals.

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Furthermore, Equilar's analysis reports equity awards in the fiscal year they were granted. In some cases, companies grant equity awards at the beginning of each fiscal year based on performance in the prior fiscal year. As such, equity awards granted in a fiscal year should not necessarily be viewed as indicative of corporate performance in the same year.

This analysis also includes supplemental information on compensation levels for chief executives at companies with highly paid HR executives. Compensation data for each chief executive was collected using the same methodology described above.

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