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Last year was a very good year to be an average CEO.
A typical chief executive at a U.S. company earned 262 times the pay of a typical worker in 2005, according to a recent report.
With 260 workdays in a year, that means that an average CEO earned more in one workday than a worker earned in 52 weeks.
That pay gap is the second-highest in the 40 years for which data are available, reports the Economic Policy Institute, a Washington-based think tank.
American CEOs fared even better in 2000, when they made an average of 300 times the salary of their workers.
Executive pay has become a hot-button issue with shareholders around the country.
A study released earlier this year by the Corporate Library -- and titled "Pay for Failure" -- singled out some of the corner suite's worst offenders. Among them: Pfizer (PFE, news, msgs) CEO Henry McKinnell; Merck (MRK, news, msgs) former CEO Raymond Gilmartin; and AT&T's (T, news, msgs) Edward Whitacre.
Blame the '90s
The triple-digit pay ratios originate in the mid-1990s, when CEOs first out-earned workers by a 100-to-1 ratio.Back in 1965, U.S. CEOs in major companies earned 24 times more than an average worker; this ratio grew to 35 in 1978 and to 71 in 1989.
After the early-2000s stock market drop reduced the value of executive options, CEO pay dropped to just 143 times that of an average worker in 2002, the EPI notes. Since then, however, CEO pay has exploded and by 2005 the average CEO was paid $10,982,000 a year, or 262 times the $41,861 pay of an average worker.
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The EPI was established in 1986 to broaden the discussion about economic policy to include the interests of low- and middle-income workers.
The group defines CEO pay as the sum of salary, bonus, value of restricted stock at grant, and other long-term incentive award payments. Worker pay is calculated as the hourly wage of production and nonsupervisory workers, assuming the economy-wide ratio of compensation to wages and a full-time, year-round job.
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