Coming in a year in which corporate earnings gains continue to come mostly from job cuts and streamlining instead of organic growth, as well as nearly a decade of stagnant wage growth for rank-and-file workers, continued gains in CEO pay underscore the disconnect between boardrooms and Main Street. Among the nation’s 104.8 million full-time workers, average median annual wages were $40,872 last year, up just 1.4% over 2012.
“The extremes are getting bigger and run smack dab into the debate of income inequality,” says veteran compensation consultant Alan Johnson.
“Boards are quite concerned over how executive compensation will be perceived. There’s very little of, ‘Let’s make Mr. Big happy because we’re all friends and he’s a nice man.’ But you try to balance what’s competitive. I tell boards that their primary goal is to do what’s best for shareholders. If a CEO has created shareholder value, whether they’re good or lucky, and things look like they’re going to go well, you’re probably going to have to pay a lot.”
USA Today / April 3, 2014