August 30, 2005
Defense contractor CEO pay outstrips other CEOs
WASHINGTON (Reuters) - Chief executives at top U.S. defense
contractors have received a 200 percent pay hike since 2001
compared to a 7 percent raise for other CEOs at large
companies, a study showed on Tuesday.
In its annual look at CEO compensation, the nonprofit
liberal Institute for Policy Studies found the increase in
executive pay at 34 publicly traded U.S. companies that are
among the top defense contractors far outstripped the pay
raises won by other executives or by military personnel.
The study excluded pay of such defense contractors as
universities, joint ventures, privately held companies,
companies headquartered outside the United States, and
companies that received less than 10 percent of their revenues
"Since September 11 (2001), the ratio between median pay
for defense CEOs and pay for military generals has increased to
23 to 1, up from 12 to 1 just three years earlier," the
institute said in its 12th annual survey.
"There is a growing chasm between those on the battle lines
and the men in the executive suites who are making millions off
the defense-spending boom," the institute said.
The figures included executive pay at companies with 10
percent or more of their revenues from defense contracts.
The average pay of a CEO at a defense contractor was $11.6
million in 2004, compared to $168,509 for a military general
with 20 or more years of experience and $24,278 for an army
private in combat, the Institute said.
It said national defense spending rose to $406 billion in
2004 from $329 billion in 2001, with about half that amount
spent each year on private contractors.
The study found average pay for U.S. chief executives
overall rose to $11.8 million in 2004, about 431 times the
$27,460 made by the average worker. In 2003, CEOs made about
301 times more than the average worker.
"If minimum wage had risen as fast as CEO pay since 1990,
the lowest paid workers in the U.S. would be earning $23.03 an
hour today, not $5.15," the Institute said in a statement.
The study's definition of compensation includes salary,
bonuses, restricted stock, long-term incentive payouts and the
value of stock options exercised. It does not include the
estimated value of options granted but not exercised.