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September 06, 2006
CEO Pay at Oil Companies and Defense Contractors Skyrockets

The chief executives at the top 15 oil companies in the United States saw their total compensation rise by 50 percent from 2004 to 2005, according to a report by two liberal research groups.

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The Institute for Policy Studies and United for a Fair Economy found that among the top 15 U.S. oil companies, the average compensation for chief executives was $32.7 million in 2005, compared with $11.6 million for all CEOs of large U.S. firms.

Among U.S. oil companies, William Greehey of Valero Energy took home the most in total compensation in 2005, earning $95.2 million, according to the report.

For the report, the researchers defined total compensation as salary, bonuses, restricted stock awarded, payouts on other long-term incentives, and the value of options exercised in a given year.

The report also found that total compensation for CEOs at defense contractors has risen sharply since the attacks of September 11. Since the attacks, the average compensation at the top 34 military contractors is double what it was in the four years before the attacks, according to the report.

Since September 2001, United Technologies CEO George David has seen more than $200 million in total compensation, the most among defense contractors, according to the report.

The increases in compensation at oil companies and defense contractors reflect growing corporate profits and higher stock prices.

Among all U.S. companies, the ratio of average CEO compensation to average worker pay was 411-to-1 in 2005. The ratio was 107-to-1 in 1990 and 525-to-1 in 2000, according to the report.

At WorldatWork's Total Rewards Conference in May, Brad Hill of Tandehill Human Capital listed capping CEO pay at a multiple of average worker pay as one of the 10 steps employers should take to maximize their return on investment in employee pay.

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