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The Take at the Top

Survey compares big company CEOs' salaries to those of CEOs from growing companies.
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Are growth-company CEOs the most underpaidbusinesspeople in America?

Love or money? INC.'s 1988 executive compensation survey presents us with a riddle of motivation.

Sure, the pay of the average growth-company CEO is now $97,000, up some 27% over five years ago. Which is not bad -- enough, certainly, to keep our hero in Chevies (see "CEOs Behind the Wheel," [Article link]). Still, salaries do look greener on the other side of the entrepreneurial fence. And if lucre isn't what we do it for, well, what is?

INC.'s surveyed CEOs have outstripped the five-year inflation rate by almost two to one -- and this at a time when the average U.S. hourly worker didn't even keep up with the cost of living. Fortune 100 CEOs, however -- they of the mass layoff and burgeoning trade gap -- have hiked their take almost 40% over the same period. Today they make nearly a million dollars more than the typical company builder.

We could muddy the issue, of course. We could talk about long-term equity appreciation, lifestyle payoffs, or psychic reward -- all the stuff you don't get if you worship P&Ls for GM. But why? Just look at the stats and say it: these folks are underpaid -- but that's not what it's about. It's about passion, creativity, the grand crusade.

Money be damned. Love wins.


COMPETITIVE ANALYSIS: HOW CEO PAY STACKS UP

IT'S ALL RELATIVE
Average salaries for:
Fortune 100 CEO $1,075,000

Major-league baseball player 447,291

Japanese CEO ($100-mil. firm) 187,300

Doctor 112,790

Lawyer 101,455

Inc.-surveyed CEO 96,811
Four-star general, U.S. Air Force 72,500

First-year investment banker 50,100

Magazine editor-in-chief 42,505

Plumbing crew foreman 29,682

Public schoolteacher 28,031

JUDGING THYSELF
CEOs believe that, if they worked for someone else and had comparable responsibilities, their total compensation would be:

Higher 52%

Lower 20

About the same 28

CEOs believe their compensation for fiscal 1987 was:

Too low 45%

Too high 2

About right 53

(continued)


THE FORTUNES OF THE CEO

The Typical Company
Total revenues $5,240,000

Employees 88

1987 payroll $1,164,000

Payroll as a percent of revenues (median) 26%

Percent that are privately owned 94%

Ceo Benefits and Perks
Company car & expenses 82%

Supplemental life insurance* 64

Tax-return preparation 52

Club dues & expenses 43

Supplemental medical insurance* 40

Personal tax & financial planning 33

Low- or no-interest loan 25

Supplemental retirement benefits* 15

Deferred compensation 14

First-class air travel 11

Moving allowance 8

* Beyond customary companywide benefits


Typical Chief Executive Officer
Total compensation $97,000*

Base salary $76,000*

Percent receiving bonus 47%

Bonus $40,000*

Bonus as a percent of base salary (median) 20%

Age 46

Equity 65%

Percent who are founders 70%

*Figures rounded to the nearest thousand


The Executive Bonus
Companies paying bonuses 80%

Basis for allocation of bonuses*
Discretionary 57%

Achievement of profits goals 33

Percent of profits 28

Achievement of sales goals 25

Percent of sales 8

Return on equity, assets, or sales 8

Companies with a bonus pool 69%

Basis for establishing a bonus pool*
Discretionary 66%

By a formula set annually 22

By a fixed formula 18

*Totals exceed 100% because of multiple responses. n




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