Apr 6, 2011
Median CEO pay jumped 27 percent in 2010
While teachers, police officers, firefighters and public employees are being blamed for the Bush recession that has state and local governments struggling to balance their budgets, and public employees have made large concession of pay and benefits, there is some good news: median CEO pay jumped 27 percent in 2010.
According to a USA Today analysis of data from GovernanceMetrics International, they found that median CEO pay jumped to a mere $9 million a year, but workers in private industry, meanwhile, saw their compensation grow just 2.1 percent in the 12 months that ended in December 2010, according to the Bureau of Labor Statistics. I have not met any workers in the private or public sector who has gotten a raise in the last couple of years, and some Michigan state employees have taken a pay cut twice so far in the past three years, as well as taking unpaid furlough days to help balance the budget.
American workers are taking home less in real weekly wages than they took home in the 1970s.
The only people doing well in this economy are the superrich and now, apparently, CEOs. In fact, in 1965 the average CEO was earning 24 times what the average worker was making, but that has jumped to 263 times at a time when workers are making concessions in wages and benefits to make a company solvent.
The superrich have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. From 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year. But the boom proved an exclusive affair: in that same period, the median income for non-elderly American households went down and the poverty rate rose.
In addition to a 27 percent pay increase, CEO bonuses are up a whopping 47 percent. It can and will be argued by right-wingers that they earned that large raise by increasing profits 47 percent, but, as USA Today points out, they boosted those profits by cost-cutting – AKA outsourcing - and layoffs. In fact, CEOs who slashed their payrolls the deepest and laid off the most workers took home 42 percent more compensation than the year’s chief executive pay average for S&P 500 companies, according to the 17th annual executive compensation survey by the Institute for Policy Studies (IPS).
But the gravy train does not end with a boost in pay and bonuses. CEOs saw the estimated future value of stock and options awards take off in 2010, with the median value gaining 32 percent to $5.6 million. These stock and options, many of which were granted when stock prices were much lower than they are now, stand to create a shower of wealth when CEOs cash them in.