The economy is still on the road to recovery, but CEOs seem to be doing just fine. A new study reveals the median pay for a CEO at a top-200 company last year was $10.8 million, up 23 percent in just a year. P.J. Joshi of The New York Times discusses why CEOs get the ever-bigger bucks while most workers are barely staying even.
GUY RAZ, host: Welcome back to ALL THINGS CONSIDERED from NPR News. I'm Guy Raz.</s>GUY RAZ, host: The average American worker earned a whopping half a percent pay increase last year, which after inflation is actually a pay decrease. But if you are lucky enough to be a CEO at a big company, 2010 was a banner year.</s>GUY RAZ, host: The New York Times commissioned a study to look into executive pay, and it found out that the average CEO was paid $10.8 million last year - that's a 23 percent increase.</s>GUY RAZ, host: Times business editor P.J. Joshi's story was released today, and she joins me on the line. P.J., who are we talking about here, and what are they making?</s>GUY RAZ, host: P.J. JOSHI: Yes. We looked at CEOs of 200 of the largest publicly held companies in America. It was quite surprising how much CEOs are making. The highest paid executive on our list was Philippe Dauman, who's the CEO of Viacom. He took home $84.5 million last year. Now, Viacom explains that some of that is because he signed a new long-term contract and got a one-time stock award that will not be re-occurring. But even in normal years, he gets paid a north of $30 million.</s>GUY RAZ, host: Not a bad deal. What explains it? Because, you know, some of these CEOs also presided over huge layoffs. There's lots of, obviously, unemployment. What explains this huge increase last year?</s>JOSHI: Yes. It's definitely been very much a recovery year. A lot of people remember the pain of the recession of 2008 and 2009. And consequently, a lot of the CEOs did not get bonuses or a lot of the other millions of dollars' worth of extras that they usually get, even in average years. So, some of this is make-up pay, as some pay experts have told me.</s>GUY RAZ, host: I'm looking at your list here. Some of these numbers: the head of CBS, $56.9 million last year; the head of DirecTV made $32.9 million; the CEO of Target, $23.5 million. So, do those 23 percent pay raises, do they correlate to the actual profits these CEOs have overseen?</s>JOSHI: Profits were up significantly at these universe of companies. So, 23 percent pay increase might correlate to that if you're just looking at profits alone.</s>GUY RAZ, host: OK. So, let's talk about shareholders, because under the new federal rule, shareholders actually have a say about CEO pay plans. They can't force them, but they can suggest what CEOs should be paid. It doesn't seem like shareholders are that bothered by the pay rates.</s>JOSHI: That's correct. Under the Dodd-Frank financial reform bill, there was a provision called say on pay. The boards are supposed to put forth outlines of their pay packages. And surprisingly in this universe of 200 companies, only 1.5 percent of the votes failed. Now, these are just advisory votes. So, even the ones that failed, the boards don't necessarily have to go back and revise their pay packages if they don't want to. But what was surprising is even though only 1.5 percent failed, the vast majority passed with 80 or 90 percent approval, according to the data we got.</s>GUY RAZ, host: Obviously, ordinary Americans are not faring as well. Unemployment is high. What explains resilience among CEOs in such bad economic times?</s>JOSHI: So, there's a little bit of make-up pay going on. The other things you're also seeing for CEOs is some of the paper profits they're sitting on are worth a lot more than they used to be. A little bit of this is off of the lake - but on effect where everybody wants to be above average. So if it's a good year, the CEO expects to be paid above his peers. But, of course, everybody can't be paid above his or her peers. So...</s>GUY RAZ, host: You should see what the real estate prices of Lake Wobegon are doing right now. That's P.J. Joshi. She's a business editor for The New York Times. P.J., thanks so much.</s>JOSHI: Thank you.