Midday Report: Executives Paid in Stock Rake It In as Workers Struggle

Produced by Drew Trachtenberg

The rich get richer, and the rest of us muddle along.

A new report on executive compensation shows the financial crisis has actually been very good to many of the people occupying those cushy corner offices.

While many of us benefit from the recent rally in stocks, those execs often get paid partly in company stock, and they are making out like bandits. And there's nothing shady or nefarious about it.

Here's what's happening: in the wake of the financial crisis, many companies decided to link executive compensation to the performance of the company's bottom line or its stock. Those decisions were made after stock prices had collapsed. So the stock options that were awarded are now worth a small fortune -- or in some cases, a not so small fortune.

An annual report from Equilar found that companies with the highest pay figures last year granted large stock options back in 2010, when the market was low. The compensation research firm says the value of those awards is now much higher than the companies had anticipated.
John Hammergren, CEO of McKesson Corporation    AP Photo/George Nikitin
George Nikitin, APJohn Hammergren, CEO of McKesson Corporation.


For example, McKesson's (MCK) CEO was the highest paid in the survey, with what Equilar terms "realizable pay" of more than $150 million dollars in the last fiscal year. That's double what the company had targeted for him.

Ralph Lauren earned $109 million. In all, there were 20 execs that made more than $31 million.

But the average worker is not feeling so excited by his or her pay: CNNMoney reports people in seven of the 10 occupations with the most workers earn less than $30,000 a year.

There are about 4.3 million people working in retail sales. Their average pay last year: $25,300. Food preparation workers, the third most common job, were paid less than $19,000.

Of the 10 most common jobs on a government list, only nurses took home significantly more – an average of nearly $68,000 last year.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum