Average CEO pay in Minnesota is back above $1 million.

After falling for two consecutive years and holding flat in 2010, median total pay for Minnesota's 100 highest-paid CEOs jumped by 26 percent in 2011 to $1.19 million, hitting seven digits for the first time since 2007.

Stock options and restricted stock tend to drive the headline-grabbing paydays of chief executives. But the Star Tribune's 2012 Executive Compensation Report also shows that CEOs had reasons to smile about their cash compensation -- salaries and bonuses. Seventy-one of the top 100 CEOs got a salary bump in 2011. The median raise: 4.6 percent.

Overall cash compensation -- salary plus bonus -- rose for the second consecutive year. Median cash compensation for the 100 highest-paid CEOs was up 8.5 percent to $768,749 -- the highest level since 2007.

The higher compensation reflects improved results and healthier stock prices at these companies, despite a still-slow economy.

"In 2009-10, executive pay went down because companies didn't meet goals during the recession,'' said Don Lindner, executive compensation practice leader for WorldatWork, based in Scottsdale, Ariz. The membership organization tracks salary trends at more than 2,200 U.S. companies.

Now, in general, companies are performing better. So it's no surprise CEO pay is going up. "Things are working the way they ought to,'' Lindner said.

The Great Recession and an anemic recovery hobbled corporate profits and stock prices, pushing down CEO compensation for nearly three years. Median CEO pay remains more than $300,000 below where it was in 2007, but some observers pointed to the rebound as evidence that companies are getting healthier.

"Good news for the 1 percent," said V. John Ella, a Minneapolis attorney who specializes in executive compensation. "Hopefully, this portends the beginning of a true economic recovery for all."

Robert Kennedy, a professor in the department of ethics and business at the University of St. Thomas' Opus School of Business, said he agrees that -- after a decade's worth of new regulations -- CEO pay is more aligned with company performance. But employees at many of those companies have seen their earnings erode.

"It's not surprising, but a little disappointing, that pay for CEOs has gone up but not pay for regular employees,'' Kennedy said. "I think that can't continue forever. But it certainly is what we've seen in the last few years.''

Lower on the corporate food chain, average salary increases for salaried workers in the Midwest rose about 2.8 percent in 2011, compared with 2.5 percent in 2010, according to WorldatWork.

Nationally in 2011, salaries for officer-level employees rose just 2.8 percent, the firm reported. And among all the companies responding, 7 to 10 percent reported salary budgets that remained effectively frozen in 2011, depending on the job category. That's down from 20 percent in 2010 and 43 percent in 2009 -- the trough of the Great Recession.

Does the boost in CEO pay in 2011 suggest that rank-and-filers can expect a bigger raise? Not likely. There's no indication companies are playing post-recession catch-up, WorldatWork reports.

"There are very few [employers] reporting average increases above 4.1 percent," said the firm, which noted that employee raises in recent years are among the smallest it's seen in 37 years.

A stock sea change

For the first time in our survey, vesting shares of restricted stock surpassed gains from stock options as the biggest contributor to what's called "equity-based" compensation. Unlike stock options -- which can become worthless if shares don't hit a trigger price by a certain date -- restricted shares are a straightforward transfer of company stock. The executive becomes vested in the shares after meeting time and/or performance-based restrictions.

Stock options, a staple of the 1990s bull market, came under intense scrutiny amid high-profile corporate scandals such as those at Tyco and Enron. Critics argued that options gave CEOs too much incentive to boost the company's stock price in the short term, possibly putting long-term performance at risk.

The 2002 Sarbanes-Oxley Act, subsequent accounting changes that make stock options more expensive for companies, and new "say-on-pay'' shareholder votes have tempered their use.

"Stock options are so 1990s/early 2000s," said Ella. "Restricted stock is just so much cleaner.''

The shift has been profound. In 1999, the last full year of the 1990s bull market, gains from stock options accounted for 70 percent of total compensation for Minnesota's highest-paid CEOs. In 2011, option gains contributed just 20 percent of total compensation.

Meanwhile, vesting shares of restricted stock accounted for 31 percent of total pay, or $92 million last year. As recently as 2009, vesting shares contributed just 10 percent of total pay.