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In recognition of the just-completed Labor Day weekend, I'd like to offer a salute to American workers, who the United Nations just reported are second only to Norway's laborers when it comes to productivity.
And now, a bit of bad news for those same workers: You're not getting credit for that productivity. Instead, top executives at your companies are reaping the rewards in the form of increasingly fat paydays.
Here's a quick look at four ways in which workers are being shortchanged by their bosses.
No. 1: The chief executives at the biggest U.S. companies last year made as much money in a single day as the average worker made for the whole year.
Top execs at Fortune 500 companies averaged $10.8 million in total compensation in 2006. The average worker, meanwhile, made $16.76 an hour, which worked out to $29,544 for the year. Those numbers come from a report called "Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership" (.pdf file). The report was released last week by the Institute for Policy Studies and United for a Fair Economy.
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And it's not clear that all of their CEOs were earning their keep. Take the top earner last year, then-Yahoo (YHOO, news, msgs) CEO Terry Semel. He got $71.7 million, chiefly in options grants. He also cashed in $19 million worth of options. That's a lot of loot. From a shareholder perspective, it's tough to argue that Semel earned it.
Yahoo's stock is lower now than it was at the start of 2004, while the Standard and Poor's 500 index ($INX)has advanced more than 30% in the same time period. Semel stepped down as CEO in June because of shareholder dissatisfaction with his company's performance.
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No. 2: The managers of the 20 top hedge funds and private-equity shops made more every 10 minutes last year, on average, than the average worker made for the whole year.
The top bosses at the top 20 investment shops earned an average of $657.5 million for the year, according to data cited by the "Executive Excess 2007" report. Renaissance Technologies' James Simons led the way, earning $1.5 billion. Steven Cohen at SAC Capital and Kenneth Griffin at Citadel Investment Group ran neck and neck for second place. Each got $1.2 billion.
"We are back to the gilded age of a hundred years ago," concludes John Cavanagh, the director of the Institute for Policy Studies and a co-author of the report.
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No. 3: True, many workers got a break on July 24, when the federal minimum wage was increased to $5.85 from $5.15 -- the first increase in the federal minimum wage in 10 years. But the minimum wage is still 7% below where it was 10 years ago, adjusted for inflation. Meanwhile, CEO pay has gone up 45%, adjusted for inflation, in the same period, according to the "Executive Excess 2007" report.
No. 4: U.S. CEOs enjoy supersized advantages in pensions and perks, too.
Thanks to generous contributions from their companies, CEOs at S&P 500 companies retire with an average of $10.1 million in their supplemental executive retirement plans, according to the Corporate Library. In contrast, only 36% of American households headed by someone over 65 even had a retirement account in 2004. Those accounts had an average value of $173,552, according to the Congressional Research Service.
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Executive excessA new study says society is paying a high price for those skyrocketing salaries.
The top U.S. CEOs enjoyed perks worth an average $438,342 in 2006, according to data cited in "Executive Excess 2007." They got money for everything from personal travel on corporate jets, to reimbursement for country club fees and taxes on bonuses.
An extreme example: Ryland Group (RYL, news, msgs) chief Chad Dreier got $6.9 million worth of perks last year for benefits that included private use of his company's jet and a $5.7 million "tax gross-up" to cover the taxes on his stock options.
Continued: Why are they paid so much?
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