PITTSBURGH — American's chief executives made a bundle last year.
Their average salary and bonus hit $2.3 million, a 39 percent raise from the year before, according to Business Week magazine. Throw in incentive plans, retirement benefits, and stock options, and the average jumps to $5.8 million, a whopping 54 percent raise from 1995.
What does it mean to earn that kind of money? The AFL-CIO has put up a site on the Internet (www.paywatch.org) to put those figures in perspective for workers.
Take Lawrence Coss, chief executive officer (CEO) and chairman of Green Tree Financial Corp. in St. Paul, Minn., and one of last year's big winners in executive pay. His company sells mobile homes, but his pay is decidedly more "up market."
He earned $102.4 million plus another $38.8 million in stock-option grants.
How long would it take the average worker to earn that kind of money? At $24,700 a year, the average American worker would have to work 5,720 years.
"It's clearly pay that is beyond what is required to attract people to run corporations," complains Chris Bohner, research analyst for the AFL-CIO's office of investment.
By putting the information on the Internet, organized labor hopes to spur a grass-roots movement to curb excessive pay. The Internet site even includes a worksheet where individuals can compare their own compensation to that of nearly 100 chief executives.
Pay inequality is clearly on the rise. Even before last year's whopping increase, the average chief executive in the United States earned 212 times what the average factory worker did, according to compensation firm Pearl Meyer & Partners Inc. That same ratio 30 years ago: 44 to 1.
High pay has its defenders.
"You have a real shortage of highly talented executives. The reason for that is that America is so prolific in starting up companies that there aren't enough of them," says James McKinney, a compensation consultant at Hirschfeld, Stern, Moyer & Ross in New York.
Some experts see signs of stiffening resistance to big pay for top jobs.
So far, hundreds of responses on the AFL-CIO Web site run 10-to-1 critical of big salaries, Bohner says.
This year shareholders filed 112 proxy resolutions on executive pay, up from 63 last year, according to the nonprofit Investor Responsibility Research Center (IRRC), which tracks 1,500 publicly traded companies.
While that total can be skewed (one shareholder filed 22 of this year's resolutions), executive pay has become the leading proxy issue, says Kathy Bayne, a compensation analyst for IRRC in Washington.
Shareholder activists have pushed for years to link the pay to the performance of their company through the use of stock options and other incentives.
But that strategy has backfired. The long bull market in stocks has pushed executive compensation deep into record territory. Activists now pay closer attention to when and how those options are doled out.
In 1988, for example, stock-option proposals won near unanimous approval among shareholders, with an average of 3.5 percent voting against, says IRRC. Last year's opposition reached a record 19 percent.
Will this be the year of shareholder revolt?
"I think mutual funds are going to be surprised when they get letters from shareholders" protesting executive pay, says Bohner.