The average pay raise for top executives last year was 54 percent, compared to a typical 3 percent boost factory workers got, Business Week reported.
That meant that the average CEO paycheck in 1996 was 209 times that of a factory employee, Business Week said in advance of its April 21 cover story.
The magazine toted up salaries, retirement benefits, incentive plans and gains from stock options of the top two highest paid executives at 365 companies to come up with the average salary of $5.78 million for its 47th annual Executive Pay Scorecard.
At the top of the pack is a relative unknown, Lawrence Coss, chairman and chief executive officer of Green Tree Financial Corp. of St. Paul, Minn., who brought home $102.4 million last year based on 2.5 percent of Green Tree’s pre-tax income.
Andrew Grove of Intel was second with nearly $97.6 million, followed by Sanford Weill of the Travelers Group, nearly $94.2 million; Theodore Waitt of Gateway 2000, $81.3 million; and Anthony O’Reilly of H.J. Heinz, $64.2 million.
Stock options are the bogeyman in Business Week’s view.
“The reliance on stock options has sent CEO pay out of control,” Business Week said in a statement. Executive pay in recent years has shifted from a mix of cash and other options, giving greater play to stock options at a time the stock market has vaulted to record levels.
The switch to more stock options was supposed to make CEOs seem tethered to their companies, assuaging stockholders about where the chief executives’ priorities lay.
“It’s a soothing lullaby, but shareholders are starting to wake up to some sour notes,” the magazine wrote. “The CEO’s gains often exceed the company’s own strong year proportionally … options have hidden costs and are diluting those gains to the tune of tens of millions of dollars.”
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