At a time most employees can barely remember their last substantial raise, median CEO pay jumped 27% in 2010 as the executives’ compensation started working its way back to prerecession levels, a USA TODAY analysis of data from GovernanceMetrics International found. Workers in private industry, meanwhile, saw their compensation grow just 2.1% in the 12 months ended December 2010, says the Bureau of Labor Statistics.
Two years of scaling back amid tough economic times proved temporary as three-quarters of CEOs got raises in 2010 — and, in many cases, the increases were substantial.
The sizable pay hikes came even though the economy’s recovery remains frail, unemployment is high and corporate profits last year were roughly flat, up 1.5%, from where they were in 2007 when the stock market peaked.
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•Climbed back toward prerecession levels. Median CEO pay in 2010 was $9.0 million, based on 158 Standard & Poor’s 500 index companies with the same CEO serving all of 2009 and 2010 that have reported CEO pay, according to the USA TODAY analysis of data from GovernanceMetrics based on proxies that have already been filed.
The median amount that CEOs actually took home — which includes salary and cash bonuses, as well as stock and options awarded in previous years that vested or were cashed in — was $8.6 million. That’s the most CEOs have pulled down since the median of $9.2 million in 2007, according to GovernanceMetrics’ analysis of S&P 500 companies.
•Bounced back in a big way. CEOs’ 2010 median pay jumped 27% from $7.1 million in 2009, one of the largest increases in recent history. The jump was a complete reversal from 2009 and 2008, when most CEOs took a pay haircut. The growth in CEOs’ median pay topped the median 21% total return that investors would have collected if they owned shares of the companies in the compensation analysis.
•Delivered big bonuses. CEOs received a median of $2.2 million from bonuses, up 47% from $1.5 million in 2009. And that comes on top of a healthy 7% boost to the median salary, which is now $1.1 million.
•Set up for an even bigger payday in the future. CEOs saw the estimated future value of stock and options awards take off in 2010, with the median value gaining 32% to $5.6 million. These stock and options, many of which were granted when stock prices were much lower than they are now, stand to create a shower of wealth when CEOs cash them in.
How did CEO's engineer these big gains in pay?
From layoffs and cost cutting at their companies:
Yet the fact that CEOs’ pay is rising along with stock prices underscores the disconnect between pay and companies’ true underlying performance, Lazonick says. While companies in the S&P 500 boosted profit 47% last year, much of that was due to cost-cutting and layoffs, not from the creation of businesses and growth, Lazonick says. Revenue, a gauge of the money flowing into businesses for selling goods and services, grew at a much slower pace than profit — and ended the year up just 7%.
Neo-feudalism at its best.
And now things get even better as Republicans AND Democratic governors cut taxes on these criminals while laying off public workers, cutting public employee compensation and salaries and banning the right to collectively bargain.
They're yucking it up on Wall Street and in Greenwich at this stuff, stuffing their faces with all the cash and prizes they can, but the boys with the gold-plated compensation had better watch out.
There's a lot of anger out there.
And as Paul Farrell at Marketwatch noted, that anger could boomerang on them.
Badly.
Just ask some of the oligarchs in the Mideast how things worked out.
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