New CEO/Worker Pay Gap Study
Labor Day Report Reveals Layoff Leaders Cushioned from Downturn
As the stock market slides and U.S. workers face the biggest wave of job cuts in a decade, top executives continue to enjoy exorbitant pay hikes, according to a new report, "Executive Excess 2001: Layoffs, Tax Rebates and the Gender Gap." The report is the eighth annual study on the CEO-worker pay gap by the Institute for Policy Studies and United for a Fair Economy.
Key findings from the study include:
The 1990s: A Decade of Greed
ˇ Executive pay jumped 571 percent between 1990 and 2000. CEO pay rose even in 2000, a year in which the S&P 500 suffered a 10 percent loss. The explosion in CEO pay over the decade dwarfed the 37 percent growth in worker pay.
ˇ If the average annual pay for production workers had grown at the same rate since 1990 as it has for CEOs, their 2000 annual earnings would have been $120,491 instead of $24,668. Likewise, if the minimum wage, which stood at $3.80 an hour in 1990, had grown at the same rate as CEO pay over the decade, it would now be $25.50 an hour, rather than the current $5.15 an hour.
Layoff Leaders
ˇ CEOs of firms that announced layoffs of 1,000 or more workers this year earned about 80 percent more, on average, than executives at 365 top firms surveyed by Business Week. The layoff leaders earned an average of $23.7 million in total compensation in 2000, compared with a $13.1 million average for executives as a whole.
ˇ The top job-cutters received an increase in salary and bonus of nearly 20 percent in 2000, compared to average raises in that year for U.S. wage workers of about 3 percent and for salaried employees of 4 percent.
Tax Rebates
ˇ Between 1996 and 1998, 41 large, profitable corporations used special tax breaks and credits to reduce their corporate tax bill to less than zero. Instead of paying taxes, they received outright tax rebate checks from the U.S. Treasury. As a group, the CEOs of these tax rebate firms averaged pay hikes of 69 percent, far above the typical CEO raise of 38 percent. Those pay hikes, made possible in part by tax rebates, totaled $194 million. In six cases, the CEOšs raise entirely consumed his companyšs tax rebate for the year.
ˇ CEOs at the tax rebate companies earned 12 percent more on average than executives in the Business Week surveys for the years 1996-98. Executive pay at the tax rebate companies totaled $495 million during those years, equivalent to 15 percent of the $3.2 billion in total tax refunds paid to those companies over the period.
Gender Gap
ˇ Heather Killen, a senior vice president of Yahoo, was the highest-paid woman in America in 2000, with a total compensation package of $32.7 million, a mere 11 percent of the highest-paid male (John Reed of Citigroup: $293 million).
ˇ The 30 highest-paid women in the corporate world earned average total compensation of $8.7 million, as compared with $112.9 million for the 30 highest-paid men, a ratio of 1 to 13.
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To order a hard copy of the full report, contact: Betsy Leondar-Wright, 617/423-2148 x 13, or e-mail bleondar-wright@ufenet.org. Please mention that you heard about this from the Progress Report.
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