Overview of Executive Compensation 1. What is the Universe for Executive Compensation? Executive Compensation database contains over 2500 companies, both active and inactive. The universe of firms cover the S&P 1500 plus companies that were once part of the 1500 plus companies removed from the index that are still trading, and some client requests. Data collection on the S&P 1500 began in 1994. However, there is data back to 1992 but it is not the entire S&P 1500. It is mostly for the S&P 500 (see question 4.) Executive Compensation data is collected from each company's annual proxy, which must be filed 120 days after each company's fiscal year end. Note: Since ADR's do not file proxy statements with the SEC, there is no data available for to collect in Execucomp.
2. How many executives per firm does ExecuComp collect? ExecuComp collects up to 9 executives for a given year, though most companies do only report 5. Hence, per company you will obtain several entries depending on how many executives they file in their proxy statement. To find the top 5 for a given year you would sort them by salary. To screen for executives, you may use either EXECID – wich is permanent for each executive in the database, it stays the same throughout her career – or CO_PER_R – which refers to the executive/company combination. GVKEY TICKER CO_PER_R EXECID TITLE EXEC_DIR CEOANN SALARY 1663 BUD 171 62 Chairman TRUE 900 1663 BUD 173 2257 president & CEO TRUE CEO 1325 1663 BUD 11975 12490 group vp & general counsel FALSE 540 1663 BUD 18482 18516 vp & chief finance officer FALSE 530 1663 BUD 23467 23054 vp & group executive FALSE 600 7835 NEB 11537 1544 chairman, president & CEO TRUE CEO 500 7835 NEB 13674 14091 senior vp; president-diversifi FALSE 230 7835 NEB 13675 14092 senior vp; president-internati FALSE 196.667
7835 NEB 17848 17913 senior vp; president-NEBS dire FALSE 275 7835 NEB 26376 11404 senior vp, chief finance offic FALSE 206.667 122514 BBI 23523 23105 chairman & CEO TRUE CEO 1600 122514 BBI 23526 23108 president & chief operating of FALSE 671.154 122514 BBI 23527 23109 executive vp, chief finance of FALSE 547.885 122514 BBI 25222 24600 executive vp, general counsel FALSE 484.039 122514 BBI 25228 24606 executive vp; president-intern FALSE 416.416 3. Is Execu Comp data by Fiscal Year? Yes, the data “year” in Execucomp is based on fiscal year. Hence, when you compare datasets from 2000 vs. 2001 you are talking about FY2002 vs FY2001. Compustat also includes a variable FYR which represents the month on which the fiscal year ends (e.g. FYR=9 means that FY2002 ends on september 2002). Now, although the Execucomp documentation doesn't say so explicitly, Compustat defines a fiscal year based on the FYR value. Namely, for a fisal year ending in January through May (e.g. FYR = 1 through 5), then the fiscal year assigned is actually one less than the year in which the fiscal year ends. I.e., for a fiscal year ending in Feb, 2002, the fiscal year assigned would be 2001. The same is true for a fiscal year ending as late as May 31, 2002, FYR2001. Hence, FY2002 data would apply only to companies whose fiscal year ending anytime from June 1, 2002 through May 31, 2003. This may generate some confusion in the number of firms per fiscal year. For example, given the time lags between the end of the fiscal year and the appearance of the data on Execucomp, it possible to find fewer cases for 2002. In fact, in this case you probably only have relatively complete coverage for companies with fiscal years ending Jun 2002 through Oct 2002.
4. How do I track a CEO for a specific year? To identify the CEO of a specific year you should use CEOANN, i.e. this is a historic vairable. Be aware that you may find some discrepancies with the variable BECAMECE -- when the executive became the CEO –. In these cases, you might find some valuable information in the variable COMMENT.
5. Different CUSIP ExecComp vs. COMPUSTAT The Cusip identifier in Compustat is a 6-digit number (cnum), while the Cusip identifier for the Executive Compensation is an 8-digit number (it includes the CIC code). The best way to link both databases is to use the common identifier GVKEY. However, if you want to use the CUSIP identifier, you should subtract the last two digits in ExecComp’s CUSIP.
6. Compenstation reflects both Parent and Subsidiaries. In Execu several executives are indentified as having positions with the parent and subsidiary of a given firm. In such cases, the total compensation reflects the combined total for all services to the parent and subsidiaries. In the cases where the executives are CEO's of subsidiaries, you will see their TITLEANN say something like: CEO-subsidiary name: Chmn. & CEO-Tyler B & T Co pres. & CEO-First Comm. Bank … In some cases, the subsidiaries's names are not available, and the TITLEANN would say: Chmn., Pres. & CEO-sub. 7. Discrepancies between SHROWNPC and SHROWN/SHROUT. First, SHROWN includes restricted shares, but not options. Compustat basically collects the percentage as reported by the company in their proxy (adjusting for options). Companies are not required to disclose the percentage if it is below 1%--so blanks mean <1%.
Second, note that there is a timing difference on the share count. Shares Outstanding is as of fiscal year end, while the executive share ownership is as of a couple of months after FY end--a date that is closer to when the proxy is being prepared. This may explain the differences between SHROWNPC and the ratio SHROWN/SHROUT. An example is CO_PER_R= 2627, fiscal year 1992: SHROWNPC=7.3 and (SHROWN / SHRSOUT)/10=(33.173 / 3781.49)/10=11.3993. 8. Several VALUE observations per firm, executive and year. Executives can be given multiple grants each year. So, you should check the GRNTNUM variable to see if this is indeed the cause of multiple observations. GRNTNUM will say 1, 2, 3... etc to indicate that there were multiple grants. In these cases, you should aggregate VALUE. See Execucomp Manual's definition of BLK_VALUE. It explains multiple grants. 10. Clarification about AGE variable. The AGE (P_AGE_2) variable is considered a 'header' variable in Execcomp. This means the database will only show the latest known age of the executive for all observations in the database. The Compustat Executive Compensation P_AGE_2 variable gives the age of the given executive as of the date of the filing of the most recent data year's proxy, 10K or prospectus. This date is given in the variable SRCYEAR. As a result, the ages of the executives don't vary with the data year (the value of the variable YEAR - the fiscal year). 11. How do I identify a CEO that serves in the Borad? EXEC_DIR = "TRUE" indicates that the named executive officer served as director during the indicated fiscal year. This does not necessarily indicate Chairmanship of the Board of Directors, and there is no ExecuComp variable that indicates this directly. The best way to get this information is to use either the TITLE or TITLEANN variable and search for the
character strings "chairman" or "chmn."