Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 18, 1991 TAG: 9103180115
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: The New York Times
DATELINE: LENGTH: Medium
Many chairmen and chief executives receive huge annual salaries, under what corporate America calls a "pay for performance" system. It is intended to make compensation rise and fall with a company's profits and stock price. Neither profits nor stock prices rose last year at hundreds of companies, but surveys show the pay of top-echelon executives went up anyway - by an average of 8 percent or more.
"If you have people getting millions of dollars in bad times as well as good, then the sensitivity of pay to performance is too low for this sort of compensation system to work properly as an incentive," said Graef Crystal, a management consultant and professor at the University of California at Berkeley.
The increases in executive pay came in a year when most American workers received raises of 5 percent or less, not enough to keep them abreast of inflation.
Average pay for chief executives of large companies, in fact, is often 70 to 80 times greater than the annual wages of the average worker, according to data from the Labor Department and from Towers Perrin, a New York-based management consulting firm.
This gap between executives and workers has more than doubled in the last 15 years, and so has the spread between America's top executives and those in other industrial nations.
The pay increases for top executives last year are just now being disclosed in the proxy statements that publicly owned corporations mail to shareholders in March and April.
by CNB