Corporate Profits Are Declining But CEO Pay Is Largely Intact

Only a portion of a top CEO's pay fluctuates with a company's year-to-year performance, according to one expert. 'The market usually generates and dictates what kind of compensation packages are out there,' said Mark Fagan, a managing partner of Citrin Cooperman, an accounting firm. He said CEO compensation is based on a contractual salary, an annual bonus and long-term incentives which is based on stock price. Of these three components, the bonus is the only one that may fluctuate based on yearly company performance like EBIDTA or net income. Corporate profits fell 3.2 percent in 2015, according to the Bureau of Economic Analysis - the first yearly drop since 2008. TheStreet's Scott Gamm reports from Wall Street.