AMERICAN CHIEF EXECUTIVE’S PAY

AMERICAN CHIEF EXECUTIVE’S PAY

In 1997, Ford Motor Company paid a total of $10.7 million in salary, bonuses, and options to its Chairman Alex Trotman, whose bonus alone was $7 million. In that same year, Daimler-Chrysler paid Robert Eaton $6.1 million. During that same period, the workers who provide the vehicles only received 3 percent raises in 1997. “The industry continues a two-pronged strategy to maintain healthy profits: cut costs even as they increase incentives to lure new car and truck buyers into showrooms” (Howes, 1998, ARC).

The auto executive’s pay was far greater than the average of CEO pay of 3.68 million salary, bonus and long-term incentive payouts received by “the chief executives of the nation’s 200 largest corporations as tracked by Pearl Meyer & Partners Inc., a New York compensation firm” (Howes, 1998, ARC). Is this pay “too much?” To answer that question, more questions must be asked. The most important one is “Too much in relation to what?”

Mary Conroy, in 1997, wrote a thoughtful analysis that pointed out that the average salary and benefits package of American CEOs had zoomed up an average of 10.4 percent in 1995, according to a survey of 350 of the nation’s largest businesses conducted by the Wall Street Journal. “At the time, I also reported that while CEO pay was skyrocketing, the average median wage was dropping. If the CEOs had applied the logic of higher profits equals higher pay to their employees, employees would also have seen the 10.4 percent raise their bosses got in 1995. But no, the employees got a drop in wages. And why were those CEOs getting such high wages? Because businesses’ profits could be related directly to the CEOs?” (Conroy, 1997, 1C).

If so, then the salaries would be justified. Apparently, this was not the case, if the Economic Policy Institute is to be believed. That group pointed out that the “CEOs had very little to be proud of. Increased sales were not respo



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