A study conducted by the Hay Group in partnership with The Wall Street Journal revealed that the number of companies using the Performance Appraisal methodology to remunerate their CEOs has increased in 2007 From the 200 biggest corporations in the US, 129 adopted this system.

Performance Appraisal relates the value of the CEO’s bonuses to the performance of the company, taking into consideration targets and business strategies. In most cases, results affect directly the CEO’s bonuses.

The research includes the top 200 American companies, with annual revenues above US$ 5 bi. IBM, Citigroup and Coca Cola are within this scope. Results show that plans based on performance were considered the best way to pay the CEOs as well as implementing long term plans. Traditional ways of performance bonus such as stock options and time-vested restricted stock have decreased in 7% and 14%, respectively.

Although 2007’s last quarter was warm for most companies, those included in the study had an average increase of 7.9% in revenue. Consequently, CEO’s paychecks rose by 4.5% in the same period, reaching an average of US$ 1,050,000, with the total cash amounting US$ 2,939,000, in average.