US chief executives stem increases in pay: FT

[oldhat]

Gilded Age II: Compensation Bugaloo...

http://news.ft.com/cms/s/05dd7564-4c80-11d9-835a-00000e2511c8.html

US chief executives stem increases in pay
By Dan Roberts in New York
Published: December 12 2004 22:40 | Last updated: December 12 2004 22:40

Criticism of high levels of executive pay is prompting restraint in US boardrooms, according to the first glimpse of compensation data for 2004.

The preliminary findings show salary and bonuses paid to chief executives of large US companies rose just 5 per cent this year, compared with an increase of 7.2 per cent in 2003 and 10 per cent in 2002.

Full analysis is not possible until companies publish proxy statements in the spring, but early numbers are shared privately among many companies to help compensation committees determine pay rates for 2005.

Compensation consultant Pearl Meyer, which gathered the confidential data from 70 large companies, concludes that pay awards have tended to be less generous in 2004 than before.

It calculates that base salaries fell 2 per cent to an average of $1.2m while annual bonuses rose 8 per cent to $2.8m. Total remuneration, including shares, options and grants, rose 5 per cent, in spite of a continued switch away from controversial option schemes in favour of restricted stock awards.

[Nikepallas]

1. The rich get richer and the poor suffer even more.

[oldhat]

2. Kevin Drum puts it in stark terms here:

http://www.washingtonmonthly.com/archives/individual/2004_12/005302.php

In 1991 the pay of the average American large-company boss was about 140 times that of the average worker; by last year, it was over 500 times, and growing. Last year's 7.2% rise in the average American boss's total compensation is worth over $400,000—nice work, if you can get it.

That's not $400K in pay; that's a $400K raise.

In other news, John Quiggin has been reading Pay without Performance: The Unfulfilled Promise of Executive Compensation and reports the following:

The most telling detail for me is the observation p98, that every single CEO in the S&P Execucomp Database has a defined benefit pension plan. This, while bosses everywhere have been shifting their employees onto defined contribution plans, where they, and not the company, bear all the risk, and while the Republicans in the US are trying to do the same with Social Security.

....Aggregate top-five compensation was equal to 10 percent of aggregate corporate earnings in 1998-2002, up from 6 percent of aggregate corporate earnings during 1993-1997.

Got that? A full ten percent of corporate earnings go to the top five people in the company. The. Top. Five.

Edit: Follow up here...

http://www.washingtonmonthly.com/archives/individual/2004_12/005310.php

[daleo]

8. That is an amazing statistic, and puts a lot in perspective n/t

[struggle4progress]

9. "We're suffering too". A message from The Ownership Society. eom

[Just Me]

6. Careful, there, mister. If you don't support corporate communism,...

,...you are auto-labelled a "socialist" or "girlie-man liberal" or "immoral traitor" or "anti-American" or "treasonous"!!!

[salin]

3. Who else is receiving that size of "raise"?

Looks like CEOs are the only ones whose salaries are increasing at a rate commiserate to the actual (not reported, but felt each day at the grocery store, utility bill ine, etc.) inflation we have experienced in the past year.

[tanyev]

4. Awww, rose only 5%

How ever will they manage?

[kuozzman]

5. Must be tough to show all that restraint.......

In reality, I'd bet anything they more than made up for than "restraint" with some loophole, which is pretty simple to do.

[daleo]

7. Maybe an early sign of a new Bush post-election recession

It is hard to believe that CEOs and other highly placed executives (and their friends on boards) would cut the rate of their pay increases merely due to criticism of the practice. Note that they still gave themselves 5%, anyway.