CEO salaries at highest level since 2007

Friday, May 6th, 2011 By

CEO Barbie, hard at work in the office.

Shareholders aren't pleased about the pay raises of some CEOs. (Photo Credit: CC BY-ND/Mike Blake/My Unbalanced Opinions)

Hiring was up in April, but so were unemployment numbers. However, one thing that hasn’t changed is the stagnant salary level of average U.S. workers. According to the Associated Press, however, CEO salaries in 2010 were at the highest level since 2007.

Recession Never-Never Land

The year 2007 was marked by economic boom, record high stock prices and an unemployment rate half of what it is now. Three years later, after a recession as the U.S. continued to struggle to pull itself out of the doldrums, CEO pay climbed in 2010 to an average of $9 million at Standard & Poor’s 500 companies. That’s a 24 percent increase over the average CEO salary from 2009, according to an AP study. It was also the first time in three years that CEO pay increased, and it increased across all pay categories, from salary to bonus, stock, options and more. Higher cash bonuses were common; two-thirds of executives were rewarded more than three times the amount they’d received in 2009.

Corporate profits were the justification

As corporate profits climbed at a rapid pace last year – 41 percent, reports the AP – and companies continued to cut costs from the lower end of the pay scale, CEO raises were justified by corporate boards. The stock market nearly doubled over 2010 from where it had been in March 2009, thanks to a bull market that produced significant gains in both stock and options.

How CEO pay was calculated

The AP study looked at executive salary, bonuses, perks, interest on deferred pay above market rates and the value of corporate stock and options awarded during the year. Executive data was provided by research company Equilar for 334 of the companies in the S&P 500. The AP’s analysis is considered to be the most comprehensive study of 2010 CEO compensation available.

Six of the 10 highest-paid CEOs came from media and entertainment companies, including the highest-paid CEO of 2010, Philippe Dauman of Viacom, who was paid $84.5 million. Leslie Moonves of CBS ($56.9 million); David Zaslav of Discovery Communications ($42.6 million); Brian Roberts of Comcast ($31.1 million); Robert Iger of Walt Disney ($28 million); and Jeff Bewkes of Time Warner ($26.1 million) rounded out the list of media barons.

According to AFL-CIO analysis of CEO pay data, the average CEO pay at S&P companies in 2010 broke down this way:

Salary: $1.1 million

Bonus: $251,413

Stock awards: $3.8 million

Option awards: $2.4 million

Non-equity incentive plan: $2.4 million

Pension and deferred compensation: $1.2 million

Other compensation: $215,911

Total: $11.36 million

Criticism of CEO raises

CEO pay expert Jesse Brill of CompensationStandards.com told AP that corporate boards need to consider how much wealth CEOs have already accumulated before approving record raises.

“Boards need to recognize that many CEOs already have enough in terms of motivation and lifetime wealth,” he said. “It is very frustrating to see boards keep giving them more.”

Shareholders will still have a say in such boardroom decisions, though they are typically only able to vote once every three years on what CEOs and executives are paid. Even then, such votes are not binding. They simply generate bad PR.

Sources

AFL-CIO

Associated Press

CompensationStandards.com

Equilar

CEO salaries are rising fast

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  • cyninpa

    Until we the people start standing up and really making our voices heard, we will continue to find ourselves sheared like the sheep we have become. As the US market is failing and fewer people can spend due to unemployment, high gas prices, etc, companies are now taking their show to countries like China because that's where the market is. Check into John Deere's plants in China and their reasoning, and their comment that there simply isn't enough $$ in American consumers' pockets to make us a valuable market anymore. And despite it all we keep bending over, hypnotized by our football, baseball, Dancing With The Stars, American Idol, not to mention our increasing fascination with alcohol and other mind/mood altering substances. We are losing what made America great through our greed and inattention. Snap out of it people!

  • cyninpa

    We are all getting the royal shaft and the country is starting to show the effects of rampant greed and the hear-no-evil/see-no-evil/speak-no-evil attitudes of Americans who live in fear that they will be next or find themselves unable to find a job. It's not like this in Europe where CEO salaries are tied directly to the wages of the employees. In European companies everyone share in the wealth, not just the boys club members at the top. And consider this– the president of the US is paid less than $500,000 per year to serve as CEO of the whole damn country.

  • cyninpa

    Shareholders do have a say. If they get together and voice their displeasure and threaten to dump stock and vote out board members, they can make a difference. The thing is, most shareholders are more concerned with their own pockets, the same as the CEOs. And many other stockholder involvement is through mutual funds and employer retirement funds, which makes identifying their per-company stake a little more involved than the average person wants to get– and again, they too are interested in seeing their accounts prosper and are afraid of rocking the boat. But guess what folks– we're all getting wacked. As jobs are eliminated in the name of saving money and employee downsizing through attrition where the position is never filled again means (a) more work for those who are left behind–with no $$ increase, and (b) unemployment for those who are de-selected. Yet CEO salaries go up-up-up because company profits go up, thanks in a great part to all the posisitons eliminated and salaries saved.

  • http://www.insurancecoverage.me/category/auto-insurance Ian Auto Man

    Most would agree that CEOs should get a great salary but boards need to recognize when it gets out of hand. Several hundred times the average employee, hmm maybe its time to re exam executive pay. Shareholders should have a much greater say on this issue.

    • Adirondacik

      I wouldn't agree "that CEOs should get a great salary" when workers' pay continues to stagnate and the American economy as a whole underperforms. The myth that the private sector works more efficiently than the public sector is evidenced in the tremendous waste in salaries, perks, and wasted expenses at the top. Low paid workers have watched their productivity increase dramatically over the last 40 years while their inflation adjusted wages have barely increased. As businesses have declined, however, the highest paid executives have reduced productivity, reduced efficiency, but grossly inflated pay. And think about it, every time we privatize some public function, we subsidize the inequality with our tax dollars.

  • Guest

    The Home Depot, new value is DOING THE WRONG THING. The Home Depot's hidden shame. The Home Depot's new strategy is to take bonuses from their hardest working managers and and give it to upper management. The Home Depot took the bonuses of one assistant manager in each store and made it look like these managers were not performing. The full story will come out soon and The Home Depot is going to loose millions.