How the compensation numbers in the survey were determined

The Houston Chronicle’s survey of executive compensation compares figures that companies provide the U.S. Securities and Exchange Commission in their annual proxy statements.

Longnecker & Associates, a Houston-based compensation consultancy, surveyed the documents for the Chronicle, examining proxy statements of 135 publicly traded Houston-area companies.

The rankings were prepared using a base list of top companies by revenue that was created by S&P Capital IQ for the Houston Chronicle 100 annual special section. Some companies that recently went public also were analyzed.

The S&P Capital IQ list includes some firms with dual headquarters, and some with headquarters elsewhere but with major operations in Houston or top executives based in Houston.

The survey is designed to show what each executive received in cash compensation in the past year plus the company’s equity awards. All are reported in the proxy’s summary Compensation Table. Cash compensation includes base salary, discretionary bonus awards and nondiscretionary cash-based incentive
payments.

The equity portion of compensation includes the fair value for stock options and stock awards on the date a company granted the compensation.

Total compensation also includes changes in pension value, nonqualified deferred compensation earnings, perquisites and other benefits, such as any car allowances, home security costs and personal use of company aircraft if the aggregate amount is at least $10,000.

Some critics of the SEC’s required method for calculating total compensation say changes in pension values do not really reflect current payment for performance.

Stock option values also can be misleading. If a company’s stock price soars, an option may be worth far more than a company is currently estimating it will be in the future. If the stock price drops, options worth millions on paper today could be worthless.

To read all our coverage of executive salaries, click here.