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US: New Report on CEO Earnings

How CEO Pay Took Off While America’s Middle Class Struggled

by John Burton and Christian WellerCenter for American Progress
May 23rd, 2005

 

The American dream is one of upward mobility. We believe that if you work hard and play by the rules, you should be able to provide for your family and ensure that your children have greater opportunity than you were afforded. But today, the dream of true upward mobility has been limited to a select class of corporate executives while the dreams of middle-class families have been deferred. Corporate CEOs have enjoyed record levels of compensation and corporations have seen record profits, as more and more middle-class Americans are experiencing stagnant wages and vanishing benefits. This expanding inequality is not the American dream.

  • CEO compensation is out of orbit: At the 350 largest public companies, the average CEO compensation is $9.2 million. Compensation for oil and gas execs increased by 109 percent between 2003 and 2004.
  • In 2004, the average CEO received 240 times more than the compensation earned by the average worker. In 2002, the ratio was 145 to 1.
  • These levels of CEO compensation are not the norm for the industrialized world. Typically, CEO pay in other industrialized countries is only about onethird of what American CEOs make.
  • Highly-compensated CEOs are not being rewarded for performance with the
    interests of shareholders in mind, the “textbook” explanation of CEO compensation, according to an extensive body of research and reporting.
  • After-tax profits are booming and corporate America can easily afford to offer fair wages and benefits to rank and file employees. Unfortunately, while CEOs have enriched themselves, middle-class families have taken hard hits to their
    paychecks, their health coverage, and their pension plans.
Visit the Center for American Progress to download the full report



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