Gulf Between Top, Bottom Gets Wider

CEOs at California's largest 100 public companies took home a collective $1.1 billion in 2004, up almost 20% from 2003. That compares with the 2.9% raise that the average California worker saw last year, according to the Economic Policy Institute in Washington.

The difference is even sharper at the top rungs of the ladder. The 10 highest-paid executives on this year's list earned 36.7% more than last year's top 10 -- garnering a collective $467.5 million. That's enough to buy about 275 homes in Malibu or 1.5 million sets of golf clubs or two 747 jumbo jets.

Although limited to California companies, the survey reflects a national trend: a widening chasm between the pay of chief executives and rank-and-file employees.

"The average CEO made 42 times the average worker's pay in 1980. That increased to 85 times in 1990 and is now over 300 times," said Brandon Rees, a research analyst with the AFL-CIO's office of investment, a group that tracks, and is critical of, executive pay policies. "That is clearly not a sustainable rate of growth."

Compensation consultants counter that high salaries are driven by competition for the best bosses.

"There's a different market for executive-level jobs," said Nadine Winter, a compensation consultant with Watson Wyatt Worldwide in Los Angeles. "If one company pays more than the market rate and others feel that they have to compete to get top talent, that's what they do. The market has its own momentum."

Yahoo Inc. Chief Executive Terry Semel tops The Times' pay list with a $145-million compensation package -- nearly double the $74 million that put Apple Computer Inc.'s Steve Jobs in the lead last year.

Semel illustrates one reason that executive pay is skyrocketing: Companies make lucrative deals to recruit executives, then have a tough time scaling those deals back, said Patrick S. McGurn, executive vice president of Institutional Shareholder Services Inc. in Rockville, Md.

Semel, who previously co-led the Warner Bros. movie studio, was drafted by Yahoo in 2001 to reinvigorate a company that some analysts said was in a "death spiral." Impressed by Semel's solid credentials in the entertainment industry, Yahoo's board agreed to give him 11 million stock options.