Who says U.S. salaries are stagnating?! CEO pay jumps 36.5%!
Chief executives at the nation’s major companies enjoyed a 36.5% jump in pay last year, according to a leading survey of CEO compensation. The average pay hike is for thetop executive at each of the Standard & Poor 500 companies, according to GMI, the research group formerly known as the Corporate Library. A broader survey of CEO pay at 3,000 companiesposted an average 27% increase.
Paul Hodgson, senior research associate at GMI, said the sharp rise in pay was out of line with the relatively modest improvement that companies typically achieved in profits or share price during 2010.
The most lucrative sector for CEO pay was health care, which included three of the nine top-paid executives, including the two most lucrative packages:
- $145 million for John Hammergen of McKesson Corp. (Fortune 500), which distributes drugs and health and beauty care products to pharmacies; and ,
- $98 million for Joel Gemunder, who retired in July 2010 as CEO of Omnicare (Fortune 500), which provides drugs to nursing homes and other long-term care facilities. ,
Both companies, in public filings, actuallyreported lower pay packages for the two executives. McKesson listed Hammergen’s total compensation package as $46.1 million for the most recent fiscal year, while Omnicare listed Gemunder’s pay package at $32.8 million. Neither company returned calls seeking comment.
But GMI’s analysis adds up total “realized pay” — which includes not just salary, bonus and the estimated value of stock options granted, but also the value of profits from exercising those options and pension payments. Those items are not typically included in the reports companies file with the Securities and Exchange Commission.
GMI also said Hammergen exercised more than 3.3 million stock options during the year, netting him $112 million. His retirement benefits also grew in value by $13.5 million. And, GMI added, his severance package would be worth $469 million if he were fired.
Gemunder also benefited from a large exit package that wasn’t included in the company’s listing, as did two of the other executives who made GMI’s top 10 list.
What ‘Percent’ Are You? The Numbers Behind the Tax Divide Debate
When it comes to dividing up our class structure, the middle is a good place to start — namely, the 60% of households wedged between the poorest 20% and the richest 20%. These families make between $20,001 and $100,065 a year, and were the group hardest hit by the recession: In 2008, their average income fell by 3.6%, thebiggest single-year dropin history. At the same time, they were also devastated by rising unemployment, mass foreclosures, soaring tuitions and frozen wages. By comparison, households below the 20% line often qualify for social welfare programs, were far less likely to own real estate, and were less affected by massive layoffs. In other words, they had less to lose, and ended up losing less.
On the other end of the spectrum, many of those above the 80% line were shielded from the harsher effects of economic downturns. And over the last 30 years, the top 20% have done quite well: Their share of all wages paid in the U.S. has gone from 50% to 60%. Everyone else has lost ground.
The 53% vs. the 47%
The dividing line between the 99% and the 1% is stark, but some argue there’s a better one: The boundary between those who pay income taxes and those who don’t. According to the nonpartisan Tax Policy Center, 53% of households pay federal income tax; the rest either break even or get back more in refunds than they pay.
In fact, thesecond-to-lowest20% of the country — households making between $20,001 and $38,043 — get back about 0.4% more income tax than they pay; for families who make less than $20,000, it’s about 6.8%.
Some conservatives — notably on the Tumblr blogWe are the 53%— have taken these numbers to heart, arguing that this means the bottom 47% is getting a free ride. But the 53%/47% division is a bit misleading.
To begin with, almost all households pay state taxes, Medicare tax, Social Security tax, excise taxes, sales taxes, and a raft of other government fees. When this broader, and more accurate, assessment of taxation is used, the 47% doesn’t look to be getting off so easy: Thesecond poorest quintile— the ones that got 0.4% of their income tax back — still paid more 10% of their incomes in various federal taxes.
In fact, when everything is factored in, 86% of the country pays more than it gets back in federal taxes.As for the rest, it’s not the split you might expect: More than half (8% of Americans) are senior citizens receiving Social Security.
And that last 6% — the ones who really pay nothing to the federal government? They are unemployed, disabled, in school, or making very low incomes. But even this small group pays state and local taxes, sales taxes, and other government fees.
Where the Poor Pay More
When it comes to percentage of income, the line is even clearer: For some taxes, the bottom 20% of the Americans pay more than the top 20%. For example, a household on the bottom pays almost 54% more of its income into Social Security than a household on the top. The same goes for excise taxes — fees attached to certain commodities like gasoline and alcohol: As a percentage of income, the poorest 20% pays more than four times as much as the richest 20%.