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The Wall Street Journal and The Hay Group have released their study of executive compensation at large public companies in 2010. “CEO bonuses at 50 major corporations jumped a median of 30.5%, the biggest gain in at least three years, according to a study of the first batch of corporate CEO pay disclosures”, the paper reports. The rewards were justified in most cases.

The Journal offered details of compensation from a number of companies. Many of these were ones where stock prices rose. It is easy to make the case that the CEOs at these corporations deserve increases in pay. A few CEOs on the list made more than in 2009, even through their share prices did not keep up with peer group shares or the market in general.

The underlying message of the story is that high pay packages have returned for many public company CEOs. These levels of rewards angered many shareholder groups before the recession and that sentiment will probably return now. Several attempts to allow shareholders a vote on management compensations have failed. The decisions still rest almost exclusively with board compensation committees. Some of the members of these committees have strong ties to the CEOs whose pay they set. That has caused more concern about conflicts of interest.

Boards have long been considered the enemies of shareholders. Rarely, a large institutional investor will try to oust management. New management put into place when these coups work do not work for $1. Even raiders expect their hand-picked CEOs to do well financially.

The rise in compensation detailed by the Hay Group is part of a broader trend. Most companies did better as they emerged from the recession. A rising stock market lifted most boats. The pay debate often becomes one of whether it was the CEO or the market in general which caused better financial performance. It hardly matters.

The S&P 500 is up over 50% in the last two years. Shareholders in hundreds of companies enjoyed tremendous returned over that period. It is better to ask why some CEOs did well financially during the stock market drop in 2008 than whether they did well after that. Attacks on pay had the support of the mathematics of the market two years ago. That is no longer true. The stock market increase has put many board members on the right side of the compensation argument. CEOs may be overpaid, and that may have gone on for years. At least now there is some excuse for it.

Douglas A. McIntyre