Index shows that growing compensation for highest-paid executive indicates improving economy

The highest-paid executives received an average 7.45% increase in their total cash compensation during the past 12 months, according to the August 2005 Chief Executive Total Cash Compensation Index released today by ERI Economic Research Institute and Career Journal.com, The Wall Street Journalís executive career site. The index tracks the total cash compensation (salary plus bonus) reported in the previous 12-month survey period for the highest-paid chief executive officers at a selected group of 45 major U.S. businesses.

ìThe increase in cash compensation among Americaís highest-paid executives points to a brightening economy,î says Tony Lee, publisher of CareerJournal.com. ìJust three years ago, the highest-paid executivesí salaries fell by 22.6%óso this represents a healthy turnaround.î

The total cash compensation index shows total cash compensation climbing close to the levels of 2001, before the effect that Sept. 11, 2001, had on the economy. The 2001 level of total cash compensation was $3,683,131, compared to the August 2005 level of $3,647,021.

The index also found the following.

Base SalariesóFor the highest-paid executives, and based on companies reporting year to date, the average base salary stood at $1,246,050, compared to the 2004 base salary level of $1,239,217. This reflects a 0.55% increase in base compensation over 2004.

Annual BonusóFor the highest-paid executives, and based on companies reporting year to date, the average annual cash bonus stood at $2,400,971, compared to the 2004 annual cash bonus level of $2,154,898. This reflects an 11.42% increase in annual cash bonus over 2004.

Total Cash CompensationóFor the highest-paid executives, and based on companies reporting year to date, the average total cash compensation (base plus bonus) stood at $3,647,021, compared to the 2004 total cash compensation of $3,394,115. This reflects a 7.45% increase in total cash compensation over 2004.

Total Cash Compensation Change Since 1997óThe total cash compensation index stood at 170.8, compared to the 1997 index level of 100. Since 1997, total cash compensation for the highest-paid executives has increased 70.8%.

Revenue Change Since 1997óThe August 2005 Average Company Revenue Index stood at 192.3, compared to 100 for the base index year of 1997. Since 1997, average company revenue has increased 92.3%.

ìOur new index shows a continued trend of company revenue increasing faster than total cash compensation for the highest-paid executives,î says ERI Director Dr. David Thomsen.

The total cash compensation index reflects data submitted in 2005 for a randomly (among monthly reporting dates) selected group of 45 publicly traded companies among the 6,500 that report compensation data to the Securities and Exchange Commission. This average ìcomparablesî group is from the population of publicly traded corporations that has been decreasing in size (after Sarbanes-Oxley).