CEO Pay Soars Relative to Average Workers' Pay

The numbers are mind boggling. Chief executives of U.S. corporations earned 262 times the pay of the average worker in 2005, the second-highest level in the 40 years the data's been kept, the Economic Policy Institute reported this week.

Last year, the average CEO was paid $10.9 million a year. That's 262 times an average worker's annual earnings of $41,861. Or, another way to look at it, EPI noted, is that CEO's earn more in one workday than an average worker earns in 52 weeks. Salary plus bonuses, stock options, and other payments are included in EPI's definition of CEO pay.

CEO pay relative to workers' pay has grown steadily since at least the 1960s, the institute says. In 1965, the ratio of CEO pay to average-worker pay was 24:1; in 1978, it was 35:1; and in 1989 CEOs earned 71 times more than the average worker. In 2000, the ratio hit 300:1. The only exception to the growing gap can be found in 2002, where the ratio fell to 143, EPI reported.

The report has stirred reaction from all corners. Shareholders at two major companies have already protested and the SEC is soon expected to release a final proposal to revamp executive pay disclosure so that shareholders will have a clearer view of CEO earnings and incentive pay.

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