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Pay for Players

Today’s Wall Street Journal features a special section on the WSJ/Mercer 2004 CEO Compensation Survey in which they declare “Goodbye to Pay for No Performance.”

While it seems that leaders are being held more accountable, the most interesting aspect to me is the pay trends chart on page R7 of that section of the print edition. Watch the dotted line. 2001 was a very bad year. Remember how bad? What a dip! And the picture in terms of corporate profits and CEO pay — compared against employees’ pay — since 2002 is interesting.

I had no idea profits were up so high — or that executive pay was increasing more than it did even in 1999 despite no parallel, readily visible economic boom. And… with profits and CEO pay so high, the straight-line look at employees’ pay is sobering — and somewhat sad. Sure, the rank and file didn’t take the knock CEOs felt in 2001, but shouldn’t employee pay raises be more in step with profits and CEO pay? Pretty flat!

Employee ownership of companies is on the wane. ESOPs are evolving. Are these all indicators that the CEO as hero is back? That only the CEO is responsible for corporate performance? That these are the days of “No Pay for Performance” as far as the rank and file are concerned?HR