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1 1 (April 13, 2004)

handle is hein.crs/crsuntaagqd0001 and id is 1 raw text is: Order Code 96-187 E Updated April 13, 2004 CRS Report for Congress Received through the CRS Web A Comparison of the Pay of Top Executives and Other Workers Linda Levine Specialist in Labor Economics Domestic Social Policy Division Summary The level of top executive compensation has been of interest to policymakers, shareholders, and employees for several different reasons over the years. Most recently, concern has centered on those corporations whose senior executives have enjoyed substantial pay packages while they have misstated their firms' financial condition. A little earlier in the current decade, it focused on the compensation of airline executives seeking federal assistance and/or concessions from employees. While the amount of executive salaries, bonuses, and long-term incentives sometimes is looked at in isolation, a comparison often is made between the pay package of senior executives and of employees in general to demonstrate the alleged unfairness of the corporate wage structure. The focus of this report, which will be updated annually, is on the size of average executive and worker pay over the years. Background Both worker and shareholder interests coalesced in the 1980s to bring the issue of top executive pay to the attention of policymakers. From the worker perspective, efforts at curbing labor costs to improve competitiveness were not shared by corporate heads whose large pay raises were thought by some to have contributed to the growth in wage inequality during that period. From the shareholder viewpoint, their interests and those of executives would be more closely aligned by linking raises to company performance through the use of stock-related incentives. The stock-based, pay-for-performance share of executive compensation did indeed increase over time. However, concern arose in the 1990s about rewarding mediocre performance in a booming stock market; executives' attention becoming too focused on near-term movements in stock prices rather than on other performance measures over a longer time horizon; and diluting per-share earnings due to the increased issuance of stock options. Congressional Research Service + The Library of Congress