CEO Pay Up Despite Shareholder Criticism

Associated Press

The executives piloting U.S. companies pocketed substantially more in 2004 than in the previous three years. Those gains come even as more corporate boards responding to sustained criticism about excessive pay rethink the way they award compensation, trying to more closely tie CEO pay to performance.Chief executives' pay increased by an average of 12.6 percent last year, according to an analysis of nearly 180 corporate proxy statements by compensation consulting firm Pearl Meyer & Partners. That figure does not include the profits many CEOs reaped by exercising stock options.

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The surge in what for many CEOs were already huge pay packages contrasts with an overall slowing in pay for rank-and-file workers. In the past year, the pay of the average U.S. worker rose by just 2.6 percent, an increase more than offset by inflation.

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But the bigger pay packages this year are already drawing fresh criticism from shareholder advocates and others. They are glad to see many companies moving away from the stock options that were a primary source of excessive pay in the late 1990s. But companies' shift to giving executives restricted stock shares that can be sold after a set amount of time has passed has just replaced options with shares whose worth is largely guaranteed, critics say.