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Wage Gap Between Ceos, Workers Widens Top Executives Get Pay Raises Three Times As Big As Workers

Sun., Jan. 26, 1997

Helped by a booming stock market and strong corporate profit gains, the wage gap is widening into a chasm.

Not only are CEOs of the top successful American companies receiving cash compensation of more than $1 million a year, they also are continuing to receive pay increases that are three times those earned by the average American worker.

A survey of 125 national companies found that CEOs received an average 9.8 percent increase in cash compensation in 1996. The highest increases were in software companies, where the gain was 18.1 percent, and the lowest in publishing with an increase of 2.3 percent.

Cash compensation includes base salary as well as incentive pay. It does not include long-term incentive compensation, such as stock options.

During the year, inflation ran at 3.3 percent nationally and average pay increases for all workers were estimated to be running at between 3 percent and 4 percent.

The survey also showed that the average CEO of large high-performing companies earned $1.31 million during 1996. Of that amount, $592,000 was annual incentive pay and $451,000 base salary. The average CEO of a low-performing company earned $656,000, of which $189,000 was incentive pay.

The survey, conducted by the accounting firm KPMG Peat Marwick, covered 125 publicly owned companies with annual sales from $283 million to $2 billion.

The results of the survey were discussed at a seminar held last week by KPMG in Bellevue.



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