New technology and low-cost labor in places like China and India have put downward pressure on the wages and benefits of the average American worker. Executive pay, meanwhile, continues to rise at an astonishing rate.
The average pay for a chief executive increased 27 percent last year, to $11.3 million, according to a survey of 200 large companies by Pearl Meyer & Partners, the compensation practice of Clark Consulting. The median chief executive's pay was somewhat lower, at $8.4 million, for an increase of 10.3 percent over 2004. By contrast, the average wage-earner took home $43,480 in 2004, according to Commerce Department data. And recent wage data from the Labor Department suggest that workers' weekly pay, up 2.9 percent in 2005, failed to keep pace with inflation of 3.3 percent.
Many forces are pushing executive pay into the stratosphere. Huge gains from stock options during the 1990's bull market are one major reason. So is the recruitment of celebrity C.E.O.'s, which has bid up the compensation of all top executives.
Compensation consultants, who are hired to advise boards, are often motivated to produce big paydays for managers. After all, the boss can hand their company lucrative contracts down the road.
Compensation committees, meanwhile, are often reluctant to withhold a bonus or stock award for poor performance. Many big shareholders, such as mutual funds and pension plans, have chosen not to cast votes critical of management. The results have been a growing gap between chief executives and ordinary employees, and often between the boss and managers one layer below...
Dear Leader's economy is very good, especially for his base.
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