Compensation levels and pay mixes have not been stable throughout the years, however,
Frydman and Saks (2007) analyse average cash and total remuneration of on the three
highest-paid executives in the largest 50 US firms in 1940, 1960, and 1990 and show a
significant increase in the compensation from the late 1990’s until early 2000 due to the
increasing number of options granted. Figure 2 shows a sharp peak in the compensation level
in 2000, which then decreases instantaneously after that. The figure also shows that pay was
actually quite stable until 1980’s. From 1970 to 1975, total compensation equalled cash
compensation, and there were no significant increases in the total pay. The additional
components of pay that were introduced during the end of 1970s, mainly equity-related,
increased total pay to more than the cash compensation. That was the beginning of increasing
pay levels.