HAPPY days are back - in the corner office, at least.
After shrinking during the 2008-9 recession, pay for top US executives is growing again - in many cases, significantly so.
On this year's list, the highest-paid chief executive was Philippe Dauman of Viacom, who was paid $US84.5 million ($80 million) in just nine months. Viacom has said that the compensation was inflated by one-time stock awards linked to a long-term contract signed last year.
Also at the top was Ray Irani, the chief executive of Occidental Petroleum, who was paid $US76.1 million last year, up 142 per cent from the previous one. Last year the board awarded Mr Irani a $US33 million cash bonus plus $US40.3 million in stock awards, more than double what he received in 2009.
Lawrence Ellison of Oracle, the software giant, followed close behind, with a $US70.1 million payout, though that is down 17 per cent from 2009. Still, Mr Ellison's fortunes are just fine: he had more than $US26.3 billion in stock and other holdings in Oracle last year.
Rarely has the view from the corner office seemed so at odds with the view from the street corner. At a time when millions of Americans are trying to hang on to homes and millions more are trying to hang on to jobs, the chief executives of big corporations such as 3M, General Electric and Cisco Systems are making as much today as they were before the recession hit. Indeed, some are making more.
The disparity is especially stark as companies are swimming in cash. In the fourth quarter, profits at US businesses were up 29.2 per cent, the fastest growth in more than 60 years. Collectively, US corporations logged profits at an annual rate of $US1.678 trillion.
So far, this recovery has not trickled down. After two relatively lean years, chief executives in finance, technology, energy and beyond are pulling down multimillion-dollar salaries. However, what many of these executives are not doing is hiring. Unemployment, although down from its peak, stood at 8.8 per cent last month. And few economists predict the jobless rate will drop substantially soon.
However, for the average chief executive the good times have returned. The median pay for top executives at 200 major companies was $US9.6 million last year. That was a 12 per cent increase over 2009, according to a study conducted by Equilar, a consulting firm.
Against such a backdrop, it is noteworthy that moves to empower shareholders seem to have done little to tamp down corporate enthusiasm for paying top dollar to top executives. This is generally the season when companies hold annual meetings for their shareholders.
Under new rules included in the Dodd-Frank financial regulations, nearly all public companies must now give shareholders a say on executive pay. Analysts and corporate governance experts are wondering how these votes will play out, even though companies are under no obligation to heed shareholders' advice.
The New York Times