Execs’ Earnings Have Grown Faster Than Firms’, IRS Says

Increases in the pay of the nation’s top corporate executives over the last 15 years outpaced the growth of corporate revenues and profits, the Internal Revenue Service said Tuesday.

Executive pay in 1995 surged to $307.6 billion, a 182% rise from $108.9 billion recorded in 1980, the IRS said in its report.

During that time, corporate revenues rose to $14.6 trillion, a 128% gain from the $6.4 trillion in revenues reported in 1980, the data showed. Taxable corporate profits rose to $560 billion in 1995 from $246.6 billion in 1980, representing a 127% gain over the 15-year period. Corporate income taxes rose 114%, to $197 billion from $91.9 billion in 1980.

The rate of executive pay increases could be even higher because the compensation totals in the IRS data do not include stock options and other deferred compensation plans.

According to the AFL-CIO labor organization, the average salary and bonus for a top executive in 1995 was $1.7 million. Including the gains from stock options and other compensation, average executive pay was more than $3.7 million.

The labor federation, at its World Wide Web site on executive pay, faults corporate boards of directors, which often include the top executives themselves, for the excessive pay packages.

“Too many boards of directors and compensation committees function like a clubhouse with CEOs serving on each others’ boards and approving each others’ pay packages,” the AFL-CIO said.