Big U.S. companies appear to have handed out smaller increases in compensation to their chief executives in 2013 than in 2012, mainly as a result of reduced grants of stock options, according to an early review of annual regulatory filings.

Based on disclosures from 46 companies in the Standard & Poor’s 500 Index that had filed annual compensation reports by March 11, the median compensation increase for a CEO was 1 percent to $8.64 million.

That was a slower rate of increase than this group of 46 received for 2012 when its median CEO pay rose 15 percent to $8.53 million. The median compensation for CEOs in S&P 500 companies overall increased about 5.5 percent for 2012.

The review, conducted for Reuters by proxy adviser and corporate governance consulting firm Institutional Shareholder Services, provides an early peek at compensation trends but ISS cautioned that there could be significant changes once all companies have reported and that the 46 companies may not be representative of trends for companies in the entire index. Most companies will file their executive compensation data over the next few weeks.

Some pay experts have been expecting to see slower growth in compensation for 2013 – despite the bull market in stocks – as S&P 500 corporate profits only increased 6.2 percent amid a stuttering U.S. economic performance, and due to the increasing use of performance measures to decide on levels of compensation.

In the kinds of incentive plans becoming more popular, executives do not receive higher compensation just because a company’s share price rises, but rather must perform well on a series of measures – not just profit, but often including revenue, margins, cash flow, and in some cases even a company’s safety and environment records.

“They’re not going to get monster rewards,” said Alan Johnson, managing director of pay consulting firm Johnson Associates in New York. “The indications are that companies continue to do a better job of matching up pay with performance.”

However, the figures are unlikely to assuage concerns that CEOs are reaping bigger increases than those received by many Americans further down the food chain, exacerbating inequality. President Barack Obama has been stressing policies intended to reduce inequality, such as a push for a higher minimum wage.

The study looks at what was granted to CEOs for 2013 and does not include all the compensation CEOs actually pocketed in 2013 after stock and option awards granted to them in previous years were exercised or vested. With the S&P 500 surging 32.4 percent last year, including dividends, and almost tripling from the lows it hit in the financial crisis, some of those awards from 2009-2012 have proven very lucrative.

A separate review by executive compensation data firm Equilar of 44 companies in the Fortune 1,000 that filed their statements in January or February shows that the median value executives gained from exercising stock options or stock vesting was $2.1 million in 2013, up 18 percent from 2012.

RADICAL CHANGES

Investor activists and proxy advisers, including ISS, have pressed companies for years to align pay with shareholder interests. In recent weeks, a handful of companies have made radical changes in the way they reward their CEOs, including semiconductor maker Intel Corp and mining group Freeport-McMoRan Copper & Gold Inc.

Among the 46 S&P 500 companies surveyed, the median cash salary rose $27,584, or 2.6 percent, to $1,079,327. But the median stock award rose $337,493, or 9.5 percent, to $3,887,008, and the median cash incentive award rose $63,799, or 3.3 percent, to $1,998,102.

Restraining the overall increase, though, were less generous stock options awards. Of the 46 companies, only 32 of them awarded stock options to their CEOs in 2013, down from 35 in 2012. For those 35 companies (including those who did not grant options in 2013), the average award fell by $548,543, or 23 percent, to $1,880,476 in 2013.

Some companies said they reduced their option awards as they wanted to reduce the incentive to take certain risks. At financial services company Comerica Inc, total compensation for CEO Ralph Babb fell 10 percent to $6.46 million, as the value of his option awards fell to $314,729 from $1,047,682 in 2012. Comerica said in a filing it cut the weighting of stock option awards during the year to “discourage inappropriate risk taking and better align with regulatory expectations.”

At paint maker Sherwin-Williams, total compensation for CEO Christopher Connor fell 1.5 percent to $10.8 million, as the value of stock option awards fell to $3 million from $3.3 million in 2012. The company said in a filing that it has de-emphasized stock options in favor of stock awards related to performance to provide more focus on operating performance.

“Most CEOs get it, an increase in stock price is going to be their greatest opportunity for compensation,” said David Dorman, an investor and board member at a series of companies, including network technology company Motorola Solutions Inc, pharmacy group CVS Caremark Corp and KFC and Pizza Hut owner Yum! Brands Inc.

He said that generally compensation for executives in corporate America “will be in a pretty tight range.”

A few caveats apply to the ISS figures. They do not include set-asides for executive pensions and other deferred obligations, which are often established by formula. At some companies these set-asides fell in 2013 as interest rates rose.

John Roe, ISS’s executive director of corporate services, said companies have embraced new forms of pay. “For the companies in this sample, it was a year of compensation adjustments rather than increases,” he said.

REFORMS SPREAD

The ISS review focused mainly on median figures as a way to exclude results from companies at the top and bottom of the pay scale that could distort the conclusions.

On an average basis, CEOs among the early S&P 500 filers received $9.34 million in compensation in 2013 – an increase of 2 percent from the average in 2012.

Since 2011, most U.S. companies have submitted their pay plans for non-binding shareholder votes amid concerns about excessive executive compensation.

While investors have largely supported management, the contests have given some leverage to reformers, particularly as activist investors press companies to make pay depend on relative measures like share price versus peers.

The pressure has made a difference at some companies.

For example, Freeport got only 29 percent support from shareholders for its executive compensation plan last year. Citing shareholder views, the company on March 3 filed a plan that would cut in half the salaries of its three top executives to $1.25 million from $2.5 million.

The company also said it gave them an annual compensation goal of $7.5 million, with the final figures to be based on the company’s operating cash flow, copper and oil production volumes, and performance on safety and environmental scores. Executives could still earn more than that if the company outperforms peers.

All of the elements, except for the base salary, are “at risk” and could be worth nothing in a bad year, Freeport spokesman Eric Kinneberg said via email. There is “real potential downside if performance is not good.”

Other companies that reworked pay after facing vigorous opposition to its executive compensation policies from some shareholders include Intel, which won 68 percent support last year, and Walt Disney Co with 58 percent. (Intel and Disney were not among the 46 companies in the study as Intel has yet to file its proxy statement and Disney has a fiscal year ending in September)

Disney said in a filing that it reduced the bonus paid to Chief Executive Robert Iger by almost $3 million to $13.6 million for fiscal 2013 after the company’s results did not beat certain goals.

Intel last month outlined changes for its new CEO Brian Krzanich such as allowing equity awards to fall in value if returns for shareholders don’t meet targets. Although Krzanich was promoted to the CEO job last May his compensation was less in 2013, $9.1 million, than the $15.7 million he got in 2012 when he was chief operating officer. It is also less than half the $18.3 million his predecessor as CEO – Paul Otellini – got in 2012.

Brit Wittman, Intel’s director of executive compensation, said the changes were made because shareholders wanted pay to be more closely tied to performance, especially after the financial crisis soured many on pay models that once were widely used.

“Pay for failure really seems to alienate investors,” he said.