Nation of inequality: Exorbitant CEO pay is a festering problem
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The Occupy Wall Street protesters were right about one thing. When CEOs are making 380 times the salary of the average worker, you don't have to be a Marxist to feel something is fundamentally out of whack.
In 2011 the average CEO pay of companies in the S&P 500 Index jumped 13.9 percent to $12.94 million, while the average worker pay rose 2.8 percent to $34,053. This yawning gap is the largest in the world, according to the latest AFL-CIO Executive Paywatch, but it wasn't always this way.
Scarcely three decades ago, U.S. corporate CEOs were paid 42 times the salary of the average worker -- a hefty enough differential, but one that is puny by today's standards.
As Post-Gazette business reporter Ann Belser reported Friday, an average worker would have to toil for 11,100 years to make as much as Apple CEO Timothy Cook. With an annual pay package of $378 million, Mr. Cook makes in 2 hours and 12 minutes what the president of the United States makes in a year.
The Russell 3000 Index keeps track of not only salary information but also how mutual funds voted on compensation of the highest-paid CEOs. With mutual funds owning more than a fifth of all shares in U.S. publicly traded companies, they can play a significant role in shaping, on behalf of their investors and the public, the size of executive pay. Downtown-based Federated Investors, for instance, voted 73.6 percent of the time against CEO pay packages in which its clients' money was involved.
Other shareholders are growing restless over exorbitant CEO pay as well. Citigroup's shareholders rebelled against chief executive Vikram Pandit's $15 million pay package on April 17 and two days later one of them filed suit to block the plan.
Workers wouldn't mind the high CEO pay so much if they saw their own lot improving, but nowadays employees must pay more of their health insurance costs and save for their pensions, while pay is stagnant.
Income inequality is spawning deep divisions in America, and this is one problem that starts at the top.
First Published April 25, 2012 12:00 am