In Depth
Total compensation, as defined by the SEC's Summary Compensation Table (SCT), is the aggregate of all compensation elements paid to or earned by a named executive officer during the fiscal year. The SCT is the centerpiece of proxy statement compensation disclosure and includes seven columns: base salary, bonus, stock awards (at grant-date fair value), option awards (at grant-date fair value), non-equity incentive plan compensation (performance-based cash bonuses), change in pension value and nonqualified deferred compensation earnings, and all other compensation (perquisites and other benefits). The "Total" column sums all of these elements. It is important to understand that the SCT total does not represent cash received during the year, stock awards and option awards are reported at their grant-date fair value using financial models (Black-Scholes for options, Monte Carlo simulation for relative TSR-based PSUs), which may differ significantly from the value actually realized when the awards vest or are exercised. Pension value changes can swing dramatically based on interest rate assumptions and actuarial factors, sometimes causing the SCT total to increase or decrease by millions of dollars without any actual change in the executive's pay agreement. For this reason, many governance analysts and companies themselves present supplementary "realizable pay" or "compensation actually paid" figures alongside the SCT total. CEOPayWatch reports the SCT total as the primary compensation figure because it is the standardized, SEC-mandated measure that allows consistent comparison across companies and years.