Today there is more evidence the economic recovery is treating Wall Street and Main Street very, very differently.
Continue Reading Below
Yesterday we told you how corporations were reporting profits rising 17% last quarter. That's nothing compared to how much the heads of these businesses are being paid. The median pay package for the head of a company in the S&P 500 was about $9 million in 2010 – 24% higher than a year earlier and the highest in recent memory.
In 2007, when the economy was booming, the median pay was less than $8.5 million. In 2008 it was about $7.5 million, and even lower than that in 2009. Again that's the median - some CEOs made much more than that.
The highest paid in 2010 was the head of Viacom. His $84.5 million package was two and a half times what he made the year before. And the top ten made $440 million in 2010, a third more than the top 10 made in 2009.
Why the big bonuses? For starters, profits for these companies rose 41% last year. That could be why the biggest gains in pay came in the form of cash bonuses. About two-thirds of execs got a bigger bonus than they had in 2009- some more than three times as big.
The bigger profits helped push up the typical cash bonus given to a CEO by 39% in 2010 to two million dollars. Also stocks rose 13% in 2010, and have now almost doubled since March 2009.
Companies granted their CEOs $1.3 billion in stock in 2010 - up about $300 million from the year before. Because of the jump in the markets, those stock options are now worth more than $700 million dollars - about $27 million more than the year before.
That's great for them – I love it when American businesses do well. But here's where I have an issue - that success is not trickling down to the average family. Pay for workers grew only three percent in 2010 - compared to the 24 percent for CEOs. The average wage is about $40,500 a year - less than one half of 1% of what the typical CEO made.
Government rules now do require almost every public company give investors a vote at least once every three years on what it pays its executives - but so far shareholders for only 12 companies have voted against pay plans.
The stock market booming, profits soaring...those are all good things for Americans, I know that. But if you're one of the more than 13 million out of work - it's hard to be excited about a bull market.
If Main Street isn't feeling it - there is no recovery.
Continue Reading Below