THE ANNUAL FORTUNATE 50

With the economy improving, executives see pay increases, bonuses and equity awards again
May 22, 2011 12:00 am

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One trend that remains intact is the gap between what the average executive is paid and the average worker's wages. Compare Equilar's 28 percent executive pay increase with the 2 percent increase in average weekly earnings reported by the U.S. Department of Labor.

"The disparity between CEO and workers' pay has continued to grow to levels that are simply stunning," AFL-CIO president Richard Trumka said last month in unveiling the labor organization's Executive PayWatch report.

The average pay of the 299 S&P 500 CEOs the group examined rose 23 percent last year to an average of $11.4 million. Collectively, the CEOs received $3.4 billion, or enough to hire 102,325 workers at the median annual U.S. worker wage of $33,190, the AFL-CIO said.

Applying the same median wage to the Fortunate 50, it would take 196 workers earning the median wage for a year to make as much as the average Fortunate 50 executive was paid in 2010.

Under the Dodd-Frank financial reform legislation enacted last year, publicly held companies will eventually have to provide a comparison between what they pay their executives and what they pay their average worker. But first, the Securities and Exchange Commission must develop rules for how those calculations are made.

Some companies argue that is a more costly and complex proposition than its advocates realize. Others argue the comparison will not be that helpful because it does not take into account the differences in education, skills and experience required of top executives and the average worker, or the greater responsibilities of executives.

"I don't think it's going to be very useful for many people other than as a headline," said Michael S. Sirkin, who heads the executive compensation practice of New York law firm Proskauer Rose.

Charles M. Elson, a corporate governance expert at the University of Delaware, said the pay comparison "was politically inspired, and you shouldn't combine politics and investor rights."

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.
First Published 2012-02-13 03:00:57
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