July 3, 2011 — -- While the recovery remains stubbornly slow, with 14 million people still looking for work, things are definitely looking up for those few at the very top of the economic ladder.
CEO pay went up an average of 23 percent in 2010, while wages for rest of us rose a meager one-half-percent, according to a new report prepared for the New York Times.
The report, which was prepared for the New York Times by Equilar, an executive compensation data firm, found that the median CEO salary was $10.8 million.
The report found that the chief executive of DirecTV was paid $33 million last year. The head of Occidental Petroleum was paid $76 million. Viacom's chief topped all CEOs at $84.5 million, after signing a new long-term contract that included one-time stock awards.
In comparison, the average American worker made $752 a week in late 2010, according to the New York Times, up only 0.5 percent from a year earlier.
"CEO pay tends to be more linked to performance than the average worker's pay, and this has been a good year for American public companies, after all," said Professor Robert Jackson Jr. of Columbia Law School. "What's really troubling for me is that as well as American public companies did this year, their CEOs did better. That is, their CEO pay seems to have outstripped significantly shareholder performance.
"Back in 2008 when performance fell considerably, CEO pay did not decline to the extent that shareholder value did, making us all feel a little like tails I win, heads you lose," Jackson added.
CEOs are able to have some control over their earnings because they have influence over the people who decide on salaries.
"The fundamental problem with CEO pay is that the executives themselves participate in their own compensation -- they have influence over the directors, who decide what they're paid," Jackson said. "I think the most important thing to do is rather than feel outraged, which of course is important and absolutely valid, is think about what productive steps we can take to change what's going on in board rooms -- and CEO pay reflects a more fair balance of company performance."
In some ways, executives are being rewarded for not hiring -- for getting more work out of fewer workers. Why aren't workers rewarded too?
"The worker gets paid what the market will bear and because of that you see wages that tend to reflect market values -- by contrast CEO pay is not set in a fully competitive market," Jackson said.
That may not be fair, but it's also not surprising.
So although workers may have to wait awhile for for their wages to increase, "The boss still gets his as long as investors get theirs," Jackson said.