Simply Politics & News

[ergo sum]

Executive compensation in America—already far ahead of the rest of the world, despite the best efforts of overseas managers to catch up—is now rising inexorably again. In fiscal year 2004 the total compensation of the median American company boss rose in every industry, by between 9.7% in commercial banking and 46.1% in energy, according to a new report by the Conference Board, a research organisation. In the big companies that comprise the S&P 500 index, median total chief-executive compensation increased by 30.2% last year, to $6m, compared with a 15% rise in 2003, according to a study published last month by the Corporate Library, a firm that tracks corporate-governance data.

Recent higher profits are part of the explanation for higher pay. But there is a longer-term trend at work. In 2004 the ratio of chief executives' compensation to the pay of the average production worker jumped to 431 to one from 301 to one in 2003, according to “Executive Excess”, a recent study of 367 big American firms by the left-leaning Institute for Policy Studies. That is not quite a record: in 2000 the ratio reached 525 to one (see chart). In 1990 the ratio was 107 to one and in 1982 a mere 42 to one. This year's numbers seem certain to show the gap widening still further.

http://www.economist.com/business/displaystory.cfm?story_id=5220660