Economists say the American economy is recovering at a rate of around 2 to 2.5% whilel some Chief Executive Officers at the largest U.S. public companies received huge pay raises for the last fiscal that were more than five times that rate, according to the consulting firm Hay Group.
In an article in Monday's Wall Street Journal, the average CEO pay at the largest 456 companies in the U.S. has risen to $7.23 million and the average pay hike for CEOs whose company's fiscal year ended January 3 was 13%.
The highest paid CEO was Gregory Maffei of Liberty Media who took home a whopping $87.1 million last year, which was four times what he made the year before.
With the economy still in tatters and most Americans living check to check, one wonders how a company can justify such a high pay raise to someone who was already earning over $20 million a year. Some will say he earned it because Liberty's total shareholder return last year was 247%, but chances are other employees helped out as well. Did their pay raises go up four times? Not likely.
Other CEOs receiving enormous pay hikes included Larry Ellison of Oracle who took home $68 million and Ray R. Irani at Occidental Petroleum, who received $52.2 million. Of the finance companies on the list, Blackrock paid out the biggest package, $22.65 million to CEO Laurence Fink, while Jay Fishman, at Travelers received $19.5 million. John Stumpf, CEO at Wells Fargo, and American Express CEO Kenneth Chenault weren't far behind, each with $18.6 million.
In contrast, there were a few leaders who were sensitive the nation's financial woes. Warren Buffett, CEO of Berkshire Hathaway took home just $100,000 and Vikram Pandit of Citigroup had a slightly better package of $125,000.Meanwhile, the CEOs of Google, Whole Foods, Apple, and Bank of America went even further. They didn't take any salary last year.
The Hay Group, which conducted its study of proxy filings for the Journal says one reason some CEOs took home such hefty pay hikes was because many boards had apparently lowered the bar and set "easier targets on bonuses and more reliance on restricted stock" that was not tied to performance goals.
According to the Journal, annual bonuses rose nearly 11% in the latest study to a median of $1.67 million and more than half (53%) of the CEOs got restricted-stock grants. When you total the salaries of these corporate leaders it is in the billions of dollars. Can you imagine how many jobs that could create or the number of layoffs it could have avoided? That would have shown true leadership at a time when America needs it the most.