How we did U-T's CEO pay survey
Methodology for calculating CEO compensation
U-T San Diego calculates corporate executive pay differently than most other publications.
We examine salary/bonus, stock options exercised during the reporting year, restricted stock that vests during the reporting year and “other” compensation such as car allowances, 401(k) matches and use of the corporate jet. This is known as realized pay.
The U-T does not count stock options and restricted stock awarded during the reporting year but which have not yet vested — or with stock options, have not been cashed in.
These awards are known as expected pay. Their value in the summary compensation table of each company’s proxy statement is an estimate of what they’re expected to be worth in the future. The estimates come from models and formulas. The true value to the executive could be higher or lower depending on the share price, stock splits and other factors.
The rationale behind the U-T’s methodology is that counting cashed-in stock options and vested restricted stock shows — in real money — what an executive took home during the reporting year. Taxes are owed on vested stock and exercised stock options. Taxes aren’t owed on expected pay such as unexercised options and unvested stock.