Basic corporate salaries are often supplemented by a variety of other incentives, including shares of and/or call options on the company stock, bonuses, and other forms of corporate compensation.
Over the past thirty years, executive compensation has increased dramatically, far more than the wages of an average worker. This has led to a lot of discontent among workers, as well as consumers who expect better results. One only has to look at the success of the recent Occupy Wall Street movement, which has since spread worldwide, to see exactly how dissatisfied the general working public has become with the huge discrepancy between the remuneration of CEOs and that of ordinary staff members of international corporations.
According to the latest research, the typical CEO earns between $1m and $3m per year in salary. That is only the tip of the iceberg though: a typical cash bonus is in the region of $10m to $15m. Stock bonuses can go as high as $20m and stock options sometimes go as high as $100m and even $200m, making executive compensation a significant factor on a any companies bottom line.
In 2003, Forbes added up the total executive compensation of the CEOs of the Fortune 500 companies, and arrived at a figure of $3.3bn. That comes down to an average pay of $6.6m per CEO. This figure includes salaries, stocks and stock options.
Tony Hayward, the infamous former CEO of BP took over from John Browne in 2007. He left BP under a cloud following the disastrous Deepwater Horizon oil spill and he was replaced by Bob Dudley.
Despite the circumstances under which he left BP, Hayward received a stock bonus to the value of £8m. Andy Inglis, an analyst from Pirc, warned at the time that, “elements of the remuneration package are excessive, particularly in respect of the departing directors retaining an interest in performance shares”.
Mark Thompson has held the position as Director General of the BBC since 2004. Before then, he was the CEO of Channel 4. Thompson gets more money than any other employee of a public-sector organisation in the UK, with his gross earnings of between £800,000 and £900,000 per annum.
In January 2010, Thompson was the subject of intense criticism over his £834,000 remuneration package. At the time, one of this own journalists told him that, “there are huge numbers of people in the organisation who think your salary is plain wrong and corrosive.”
CEO in mainland Europe, receive much lower remuneration packages than their American counterparts. According to compensation consultants Towers and Perrin, European CEOs on average earn only about 55 percent of their American cousins.
Japanese CEOs have reason to be unhappy: they in turn earn less than half of what their European counterparts earn.
As an example, we can take the telecommunications industry. The CEO of AT&T earned more than $38m in 2006, while the CEO of Deutsche Telekom in Germany only earned $3.3 million plus incentives worth $400,000.
