CEOs Of Largest U.S. Companies Received 23 Percent Pay Raise Last Year

Despite reports that the current economic recovery may be the hardest for the average American since World War II, corporate America is looking at strong profits and skyrocketing increases in executive pay.

According to the compensation-research firm, Equilar, the chief executives of the largest U.S. companies saw a median rise of 23 percent in their compensation last year, largely due to the resurgence of cash bonuses. Bonuses today are triple their prerecession levels for the highest-paid CEOs. Coupled with the recovery that many executives have seen in their stock portfolios, much of which was awarded during 2008 and 2009, “some top executives are already making more than they were before the economy soured.”

But as Matt Yglesias notes, the earnings of an industry’s chief executives often do not depend on job performance. This year’s windfall for CEOs has outpaced their median gains in both revenue and shareholders’ returns, as exemplified in the following graphic produced by the New York Times:

As more money finds its way into the bank accounts of the nation’s executives, American workers continue to struggle. The average wages for workers in the private sector rose only 2 percent over the past year. Since 2009, only 1 percent of the national-income growth went to workers’ wages and salaries, while 88 percent went to corporate profits.


And the trend shows no sign of slowing. Another forecast, recently released by Brown Brothers Harriman, reports that the second quarter of this year will see a 13.6-percent increase in the overall earnings of companies in the Standard & Poor’s 500-stock index when compared to this time last year. Meanwhile, unemployment stagnates above 9 percent, the housing market remains soft, and banks continue to hoard their reserves instead of offering loans.

Sarah Bufkin