American CEOs Enjoy 3.5 Percent Pay Hike Amid Economic Slowdown

June 16, 2008 7:07 p.m. EST

Washington, D.C. (AHN) - Amid an economic slowdown in the U.S., American chief executive officers continued to enjoy hefty pay increases.

The median pay of CEOs from Standard and Poor's 500 list totaled almost $8.4 million or an increase of $280,000 compared to two years ago, according to an analysis by the Associated Press. Overall, the CEOs enjoyed a 3.5 percent pay hike, while the rest of the nation saw their homes foreclosed, became unemployed and hungry.

Merrill Lynch CEO John Thain headed AP's list of big earners with a $83 million compensation which included a signing bonus and other perks to induce him to leave his former post at the New York Stock Exchange.

Are the top pay the CEOs get worth it? While the top 10 CEOs collectively earned over half a billion dollars in 2007, 50 percent of the companies they headed experienced drastic declines in profitability.

A Watson Wyatt survey, however, said there was a link between high pay and performance. The survey showed high performing chief executives with three-year total returns to shareholders of 101 percent were given payouts averaging 156 percent of their targets. In contrast, low performers with three-year TRS below 33 percent got only a 71 percent payout.

Some firms, however, whittled the pay of their CEOs following the dip in the company's stock prices, which formed part of their compensation package.

The debate over excessive CEO pay has reached the U.S. presidential campaign. Both Democrat candidate Barack Obama and Republican John McCain favor granting shareholders more voice in determining executive pay. But Obama wants the voice given legislative fiat, while McCain prefers leaving the matter for companies and shareholders to resolve.