The Christian Science Monitor Weekly

Vol 106 / Issue 30

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MONEY By Schuyler Velasco / Staf writer In the economy's emergence from the Great Recession, the recovery of the nation's corporations and top earners easily has been the most robust. It will surprise few, then, that chief executive officers have become an eight-figure earnings group for the first time. CEO pay in the United States has surged 9 percent since 2012, but wages only rose 1.3 percent for everyone else. Annual pay among CEOs at large public companies reached a median $10.5 million in 2013, according to a study released by Equilar, a company that tracks executive compensation packages, and The Associated Press. The report, which examined regulatory filings of compensation packages for 337 company heads, found that CEO pay was up 8.8 percent, from a median $9.6 million in 2012. It was the fourth straight year of gains following the recession, and now the typi - cal CEO makes more than 257 times the salary of an average worker in the US. Most of the surge came because of stocks, which jumped 17 percent in value as part of compensation packages. The stock mar- ket was a key driver of economic growth in 2013, hitting record highs and gaining back everything it lost during the recession. Stocks on the Standard & Poor 's 500, for instance, jumped 30 percent last year. CEOs had a median $4.5 million in stocks last year, according to the study. "Over the last several years, companies' boards of directors have tweaked executive compensation to answer critics' calls for CEO pay to be more at- tuned to performance," reads the introduction of the Equilar/AP study. "They've cut back on stock options and cash bonuses, which were criticized for rewarding executives even when a company did poorly. Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options. The change became a boon for CEOs last year." So, who are the standouts? The highest-paid was Anthony Petrello, who runs the oil-field services company Na - bors Industries. He made $68.3 million last year, mainly because of a contract restructuring. The top-earning female CEO was Carol Meyrowitz, who runs the parent company of discount retailers T.J. Maxx and Marshalls. She makes $20.6 million in annual compensation. The median pay of the top executive women was actually higher than that of their male counterparts ($11.5 million versus $10.5 million, respectively), but that's no vic - tory for gender equality because there were only 12 female CEOs surveyed, compared with 325 males. The Equilar/AP findings cast more harsh light on the widening wage gap in the US, where worker salaries have stagnated as corporations and the rich- est Americans get the bulk of the benefit from economic growth. Worker wages only increased 1.3 percent in 2013, ac- cording to the Bureau of Labor Statis- tics. A typical worker would have to work for 257 years to make a CEO's typical salary. As big as that gap is, however, it's not unprecedented. In fact, it was nearly twice that at its peak. Astronomical CEO pay is a relatively new economic phenomenon. Between 1960 and 1990, CEO compensation hov - ered well under 100 times worker pay, according to figures from the Institute for Policy Studies. That changed in the early 1990s, when companies began making stock options a bigger part of executive pay. At its peak around 2000, compensation for CEOs in the S&P 500 averaged 411 times that of average worker pay, according to figures from the Economic Policy Institute. Regulatory scrutiny, shareholder pushback, and the stock market crash tempered CEO pay during the Great Recession, and chief executives made a mere 181 times more than their workers in 2009. But a bullish stock market has them heading skyward again. That is, if shareholders will tol - erate it: Earlier this month, AP notes, major shareholders for the restaurant chain Chipotle voted against huge in- creases in compensation for co-CEOs Steve Ells and Montgomery Moran, and investors in general are becoming more outspoken when a company's execu - tives don't act in what they feel is their best interests. "It used to be sharehold- ers pushing against boards who were buffering the CEOs," Harvard Business School professor Rakesh Khurana told Bloomberg in 2012. "But now investors are telling directors who should be the CEO and how management should run the company." r CEOs cash in more than ever before Phil Marden But wOrkEr wagEs stagNatE iN a stark EarNiNgs gap. SOURCE: Economic Policy Institute RICH CLABAUGH/STAFF 1970 1980 1990 2000 2010 100 0 200 300 400 CEO-to-worker compensation ratio (selected years) 1965 18.3 1978 26.5 1989 53.3 2000 411.3 2007 244.1 2009 181.6 2012 202.3 thE ChristiaN sCiENCE MONitOr wEEklY | June 16, 2014 43

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