Newspaper article The Christian Science Monitor

Soaring Stocks Send CEO Salaries Sky-High Average Compensation for Company Heads Is Up 36 Percent, Compared with3.5 Percent for Workers

Newspaper article The Christian Science Monitor

Soaring Stocks Send CEO Salaries Sky-High Average Compensation for Company Heads Is Up 36 Percent, Compared with3.5 Percent for Workers

Article excerpt

Someone has to take credit for the America's economic boom. So, why not the boss?

That's what the nation's chief executive officers are doing. Proxy statements coming out this spring show stock options, bonuses, and buckets of money pouring into pin-striped pockets. And the soaring stock market has made some of the corporate heads very, very rich indeed.

In some ways, the soaring compensation is merely reflecting the overall economy. The Dow Jones Industrial Average is hitting records almost every day, and Wall Street is exuding optimism. That message is reaching the boards of directors, who watch company share prices closely. As some stock prices have soared, bonus plans have clicked into place. In addition, compensation specialists say, the labor shortages that exist in the workplace extend to the upper echelon of companies as well. So companies, in an effort to keep their executives from moving to greener pastures, dangle some of that high-flying stock. "Wall Street is at the heart of this," says Cindi Fukami, a professor at the Daniels College of Business at the University of Denver. "So much is predicated on shareholder value." Total compensation, including stock options, is up about 36 percent, according to Graef Crystal, editor of the crystalreport.com, an Internet newsletter on executive pay. "It's moving up at a very rapid rate," says Mr. Crystal, who is known for his independent and critical analysis. By way of comparison, the Bureau of Labor statistics reports the average worker saw total compensation rise by 3.5 percent. Even the average baseball player saw his pay rise by only 19 percent, according to a study by the Associated Press. As happens in any year, there are some eye-popping numbers. At Citigroup, Sanford Weill received $141.6 million, and John Reed, his co-head, got $44.4 million. General Electric's chairman, John Welch Jr., pocketed $52.6 million, while Viacom head Sumner Redstone got options worth $50.5 million. The average chief executive officer's compensation has now jumped to $7.8 million per year. These CEO treasure chests raise the ire of the AFL-CIO's Secretary-Treasury, Richard Trumka who calls this year's pay hikes "outrageous." The union has set up a Web site (www.paywatch.org), which includes the pay of Fortune 500 CEOs. So far this year, the site has garnered 3.3 million hits. Workers can find out how long it will take them to make as much as the CEO. "Depending on the CEO, it's usually a few thousand years," says Mr. Trumka. He complains that there is no correlation between pay and performance. He adds some CEOs have built "country club boards" with friends and relatives. "The more we look at it, the more upset we become since workers are still scraping to get by," says Trumka, who made $165,000 last year - the same pay he received in 1995. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.