Rising price index cut manager pay
The consumer price index (CPI) made significant cuts in managerial buying power, despite sizable increase in compensation, a national survey of executive salaries and bonuses indicates.
According to the Hay Group of management consultants, most companies increased executive pay by an average of 10.5 percent while the CPI increased 14 .7 during the survey period, the year ending May 1, 1980. In 1979 the CPI increased 10.4 percent while management compensation stayed ahead, increasing an average of 11 percent.
The survey covered more than 500,000 executives and supervisors in over 800 organizations. More than 500 are industrial companies, including many of the Fortune 500; about 200 are financial institutions.
The largest 1980 increases occurred in industrial companies because of the high earnings and large bonuses of those firms. For example, chief executive officers of industrial companies had average cash increases of 11 to 12 percent while their counterparts in finance averaged 9 to 10 percent.
Bonuses in 1980 were based on 1979's high profits. Industrial profits rose an average of 27 percent in the Fortune 500 companies surveyed.