U.K. and U.S. execs enjoy huge gains

Studies show compensation far outweighs that of average workers

A new study says chief executive officers of large companies in the United States made as much money from just one day on the job as average workers over an entire year. Executive Excess — The Staggering Social Cost of U.S. Business Leadership finds top executives averaged $10.8 million US in total compensation, more than 364 times the pay of the average American.

Compiled by the Institute for Policy Studies in Washington, D.C. and United for Fair Economy in Boston, the report says the federal minimum wage stands seven per cent below the minimum wage of a decade ago, in real terms, while CEO pay has increased roughly 45 per cent.

In addition, American executives considerably out-earn their European counterparts. In 2006, the 20 highest-paid European managers made an average of $12.5 million US, one-third as much as the 20 highest-earning U.S. executives last year.

“The vast rewards that go to business leaders in the United States represent, in short, not an inevitable unfolding of marketplace dynamics, but a marketplace failure,” said the report.

In another study, from the U.K., boardroom pay at top companies soared 37 per cent in the last year as full-time directors were rewarded with “inflation-busting” increases in base salaries, cash bonuses and substantial payouts from share schemes.

That’s according to the Guardian newspaper's annual survey of executive pay at the 100 biggest companies on the stock market. The increase was fuelled by annual cash bonuses and gains from long-term, share-based incentives that enabled executives to cash in on rising share prices. Basic boardroom salaries were up just five per cent.

“This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain’s boardrooms are slowly losing touch with reality,” said Brendan Barber, general secretary of the Trades Union Congress, in the Guardian.

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