Let’s see, the world economy is in the toilet, there are worldwide protests against corporations and governments, unemployment is still way too high, job growth is slow, good people are losing their homes, our government can’t get their act together for one day… and yet American CEOs are making 40% more. Ah, yes… While millions of people are out of work, single individuals are raking in the dough. Now I understand a boss, incompetent or not, should be making the largest sum of cash… but is it necessary at the expense of other people’s livelihood?
According to The Guardian:
Chief executive pay has roared back after two years of stagnation and decline. America’s top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounceback comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation.
America’s highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses’ profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington’s attention on the pay packages of America’s highest paid.
The Guardian’s exclusive first look at the CEO pay survey from corporate governance group GMI Ratings will further fuel debate about America’s widening income gap. The survey, the most extensive in the US, covered 2,647 companies, and offers a comprehensive assessment of all the data now available relating to 2010 pay.
Last year’s survey, covering 2009, found pay rates were broadly flat following a decline in wages the year before. Base salaries in 2009 showed a median increase of around 2%, and annual cash compensation increased just over 1.5%. The troubled stock markets took their toll, and added together CEO pay declined for the third year, though the decrease was marginal, less than three-tenths of a percent. The decline in the wider economy in 2007, 2008 and 2009 far outstripped the decline in CEO pay.
This year’s survey shows CEO pay packages have boomed: the top 10 earners took home more than $770m between them in 2010. As stock prices began to recover last year, the increase in CEO pay outstripped the rise in share value. The Russell 3000 measure of US stock prices was up by 16.93% in 2010, but CEO pay went up by 27.19% overall. For S&P 500 CEOs, the largest companies in the sample, total realised compensation – including perks and pensions and stock awards – increased by a median of 36.47%. Total pay at midcap companies, which are slightly smaller than the top firms, rose 40.2%.
GMI released a preliminary report on 2010 CEO pay earlier this year, before all the data was available. Paul Hodgson, a senior research associate at GMI, said that report had shown a significant bounce but he had expected a wider sample to dampen the effect.
“Wages for everybody else have either been in decline or stagnated in this period, and that’s for those who are in work,” said Hodgson. “I had a feeling that we would see some significant increases this year. But 30-40% was something of a surprise.” Bosses won in every area, with dramatic increases in pensions, payoffs and perks – as well as salary.
Still, there are no bankers among this year’s big winners. Three of this year’s top 10 earners come from the healthcare industry. Top earner John Hammergren at McKesson, the world’s largest healthcare firm, made $145,266,91 last year – most of it from stock options.
So basically CEOs are getting rich at the expense of our health. Sick… pun intended.