The new income gap

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The Corporate Library released early results of its annual CEO pay survey this morning. The takeaway: CEOs of big companies get richer. CEOs of less-big companies don’t even keep up with inflation.

Consider:

For the 380 CEOs who were in post for the whole of 2006 and 2007, the median increase in total actual compensation has fallen to 5.15 percent. The most significant element of slowdown can be seen to be annual and cash bonuses—the two amounts represented by bonus and non-equity incentive
compensation. More than half of CEOs received a lower bonus in 2007 than they did in 2006, while non-equity incentive compensation (NEIC) showed no change at the median, demonstrating that as many CEOs saw an increase as saw a fall. Nevertheless, total annual compensation did increase by 4.8 percent at the median, driven largely by increases in base salary.

That’s for the whole sample, which includes data from U.S. companies that filed proxy statements in the first quarter of 2008 and that have the same CEO as last year. The increase of 4.8%, which brings median total annual compensation to $1,306,571, is less than half the 2006 increase.

Now consider:

For CEOs in the S&P 500 the situation was different. The 97 S&P 500 CEOs in our sample who had been in post for a two full years saw a median rise of almost 16 percent in total actual compensation. While this latter figure is lower than survey findings in 2007, it is still substantial. While these CEOs did see an increase in their bonus at the median, the decreases were more dramatic—as demonstrated by the average change which was negative 15.33 percent. NEIC rose by a slightly higher median of 5.67 percent. While increases in total annual compensation were similar in the S&P 500 to those in the larger group, the higher profits from stock options and higher value gained from vested stock awards has pushed the median total actual compensation for S&P 500 CEOs well above that of their counterparts.

If you take the whole sample and strip out compensation for those CEOs running S&P 500 firms, the median increase in total actual compensation is 2%. That’s almost like a regular-person raise.

Okay, so the other thing is, I’m going to start signing my posts so when people get them on RSS feeds they know they’re from me and not Justin. You might think there would be a technology solution to this. Alas.

Barbara!

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