NEW YORK (MainStreet) — If big corporations are searching for funds to hire new employees, they could start by taking a piece of the salaries paid to top executives, one new study shows.
The chief executives of the 500 leading companies in the U.S., as measured by Standard & Poor’s 500 index, took home an average total compensation of $11.4 million in 2010, up from about $9.2 million the year before, according to a new report from AFL-CIO, a labor organization, based on analysis of CEO salaries from 299 of those companies.
To put that in context, the AFL-CIO notes that the total compensation paid out to those 299 CEOs amounted to $3.4 billion, which is enough to support 102,325 workers earning the median wage in this country, or roughly $33,000 each.
If that’s not enough, each CEO’s compensation could, on average, support nearly 200 teachers, 252 firefighters or even 28 U.S. presidents. Although, to be fair, we probably would be better off not having 28 presidents in office at the same time, but the extra firefighters would be nice.
While one might argue that CEOs should be generously rewarded for their company’s success, the AFL-CIO points out that salary trends in recent years have not reflected that reasoning. CEO salaries steadily escalated throughout the past decade to reach new levels, despite crises like the dot-com bust, and later, the financial industry’s collapse that sparked the recession. In fact, the S&P 500 Index ended last year at 19% below the levels it had reached in 2000, even as CEO salaries were significantly higher.
CEO pay practices may soon change, however, as the financial reform package passed last year requires publicly traded companies to give their investors a say in how much chief executives are paid, starting this year. This may not stop CEOs from being paid generously, but according to the AFL-CIO, it could at least eliminate some of the more egregious perks and bring CEO compensation more in line with the company’s overall performance.