Survey compares big company CEOs' salaries to those of CEOs from growing companies.
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
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:
About the same 28
CEOs believe their compensation for fiscal 1987 was:
Too low 45%
Too high 2
About right 53
THE FORTUNES OF THE CEO
The Typical Company Total revenues $5,240,000
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 as a percent of base salary (median) 20%
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