Ceo Pay Takes Sharp 1995 Jump
Belt-tightening has yet to reach the top offices of corporate America, according to a survey that found the average compensation for chief executives of major companies jumped 23 percent in 1995 to $4.37 million.
The findings could be more fodder for the presidential campaign, with Republican hopefuls and the Democratic incumbent already assailing big business for eliminating jobs as profits rise.
The consulting firm Pearl Meyer & Partners queried 35 service and industrial companies with average revenues of $21 billion. It found CEO base salaries at the companies increased to $991,300, a 4 percent jump over the 1994 salary of $950,700.
But salaries made up less than a quarter of the CEO’s total earnings. The real windfall came in compensation tied to performance - annual bonuses and stock option grants - which totaled 77 percent of the CEOs’ pay.
The average stock option was valued at $1.52 million, a 45 percent increase over 1994’s $1.05 million.
The average bonus, which was paid in 1995 for performance in 1994, was $1.22 million, a 39 percent increase over the prior year’s bonus of $876,000.
“The big increases have reflected the major moves in stock performance,” Diane D. Posnak, managing director of Pearl Meyer, said Monday.
Posnak would not disclose which companies were included in the survey, saying only they were “Fortune 100 types” that had been surveyed in previous years.
She confirmed, however, that AT&T, which announced earlier this year it was laying off 40,000 workers, was among the companies included in the survey.
Last week, a filing with the Securities and Exchange Commission reported that AT&T Chairman Robert Allen took home a paycheck of $3.3 million, about $512,000 less than in 1994.
His pay cut was due to a $1.6 billion restructuring charge taken by AT&T, which meant Allen did not meet a target for boosting shareholder value.
But Allen received 750,000 stock options, presently worth an estimated $9.7 million, following announcement of the restructuring into three separate companies. The options can be exercised over the next four years only under certain conditions.
Filings with the SEC said Coca-Cola chief executive Roberto Goizueta was paid $4.88 million in salary and bonus in 1995, an increase of 11.6 percent over 1994. He also received stock options worth $93.8 million to $149.1 million depending on the company’s stock price in the next decade.
And documents filed Monday by Citicorp revealed chairman John S. Reed received a 1995 salary of $1.3 million as well as a $3 million bonus. In 1994, his salary was $1.275 million, plus a $3 million bonus.
The generous CEO salaries at a time when many businesses are handing out pink slips has led GOP presidential contenders to bash big business. Pat Buchanan even urged a “peasant” revolt.
“Corporate profits are setting records and so are corporate layoffs,” Bob Dole told the New Hampshire Legislature before the primary.
On Monday, President Clinton asked an audience at a Detroit fundraiser how it could be that with the stock market hitting records highs, “big companies are laying people off, downsizing them.”
The president did not single out any companies, and he conceded that some layoffs are necessary. But the remarks were designed to inoculate himself against Republican attacks on his economic record.
“Even though small business are hiring people at record rate, many of our largest companies are laying off workers, some of them because they have to compete in the global economy,” Clinton said.
“Some of them are doing it even when their profits are going up so that a lot of people are insecure, even in an economy that is growing,” he said.