— by Aviva Shen on May 22, 2013 at 3:45 pm
The average CEO salary broke records in 2011 at $9.6 million — and now, that record high has been topped by 2012 salaries, which averaged out to $9.7 million. Health care and media CEOs enjoyed the highest pay, while utility CEOs had the lowest at $7.5 million. Sixty percent of CEOs got a raise last year.
Though CEO pay dropped slightly after the financial crisis, it quickly rebounded to reach new heights in 2010, 2011, and now 2012. Simultaneously, the pay gap between CEOs and workers has also broken records, as the average CEO in 2012 earned 354 times more than the average worker.
During the recession, some companies changed their compensation formulas to incorporate more stock as a way to tie executives’ salaries to the company’s performance. As the stock market enjoys all-time highs, CEO pay has also soared. Yet the stock market’s rally has not been felt by most middle and low income families, as the housing market recovers in fits and starts. As a result, income inequality has been exacerbated in the first two years of the recovery.
The Dodd-Frank Wall Street reform law tried to address this phenomenon by ordering public companies to reveal the exact disparity between their CEO and worker pay. Three years later, many big businesses are lobbying to kill the requirement in the rule-making process. Transparent payrolls can help keep executive compensation within the stratosphere and help investors get a sense of employee morale and company reputation. Even so, JP Morgan Chase CEO Jamie Dimon compared efforts to tamp down executive pay to Communist Cuba. Whole Foods, which tracks pay to ensure that no employee makes more than 19 times the median company salary, has dismissed claims that the rule burdens businesses, noting it only takes a few days to track.
Skewed executive compensation levels made some CEOs iconic villains after the financial crisis. Citigroup CEO Vikram Pandit got a $6.7 million pay-out after driving the bank to near ruin, while a Duke Energy CEO received $44 million for one day of work.
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