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Pay gaps within companies widen as top two earners, led by Facebook's Mark Zuckerberg, earn billion-dollar paychecks

For the first time ever, the 10 highest-paid chief executives in the US received more than $100m in compensation last year, and two took home billion-dollar paychecks, according to a leading annual survey of executive pay.

Mark Zuckerberg, Facebook's co-founder, was America's highest-paid boss in 2012, according to GMI Ratings annual poll of executive compensation, released on Tuesday. Zuckerberg's total compensation topped $2.27bn – more than $6m a day. His base salary was $503,205 but the vast majority of his enormous pay package came from exercising 60m Facebook share options when the company went public last year.

Richard Kinder, the CEO and chairman of energy firm Kinder Morgan, had a base salary of just $1 in 2012 and received no other bonuses. But he made $1.1bn selling restricted stock. The payout follows a nearly $60m profit from stock in 2011.

The report further illustrates the widening gap between CEO pay and that of the average worker. According to the US census bureau, median household income, adjusted for inflation, was $51,017 in 2012, broadly unchanged from 2011.

Wages for the average household have fallen about 9% from an inflation-adjusted peak of $56,080 in 1999. The census figures show a sharp recovery for those at the top of the wage scale as those at the bottom continue to see falls.

From 2009 to 2012, average real income per family grew modestly by 6.0%, according to a report issued last month by Berkeley University pair Thomas Piketty and Emmanuel Saez. However, the gains were very uneven. The top 1% incomes grew by 31.4%, while the bottom 99% incomes grew only by 0.4% from 2009 to 2012. The top 1% captured 95% of the income gains in the first three years of the recovery.

The disparity is noticeable even among the 1%, where riches accrue to the very wealthiest at an even faster rate than those below.

The average pay package of an S&P 500 chief executive last year was $13.7m, according to GMI. For those in charge of S&P small cap companies, it was $3.5m. The average rise in compensation for CEOs of the Russell 3,000 – which represents about 98% of all public US companies – was 8.47%. For the Russell 1,000 – measuring the top 1,000 companies – it was 15.47%.

Base salaries, bonuses and other forms of compensation were largely unchanged in 2012. The survey found that the outsized pay increases experienced by some CEOs came from the exercise of large blocks of stock options and the vesting of outsized restricted stock grants.

"While stock options are intended to align the interests of senior executives with shareholders, the unintended consequence of these grants is often windfall profits that come from small share-price increases," GMI said in its report.

"With option grants numbering in the hundreds of thousands or even millions, CEOs at large companies in particular are able to profit by the millions for any positive gain over the strike price of their options. Furthermore, as Mark Zuckerberg showed when he sold $1bn worth of stock at Facebook's IPO, these paper profits can quickly be converted into cash through stock sales."

Of the top 10 earners in 2012, all received the majority of their compensation for the year from share schemes. http://www.theguardian.com/business/2013/oct/22/top-earning-ceos-100m-
paychecks-record

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