CEO given $60 million lump sum to buy out contract

If you’re a CEO, you probably got a raise last year.

That’s according to a study by the Associated Press and Equilar, an executive pay research firm. They found the median pay of a CEO rose above $10 million for the first time in 2013. Looking at pay packages of 337 CEOs from S&P 500 companies who had been in their position for two years, researchers found that CEO pay increased to an average of $10.5 million in 2013, up 8.8% from 2012. It’s the fourth straight year CEOs salaries grew.

One CEO was paid a $60 million lump sum, so the company could renegotiate his contract. Oil and gas company Nabors Industries (NBR) paid its CEO Anthony Petrello the eight-figure sum to buy out his contract. Nabors was one of several companies that the AP reported was under pressure from shareholders to buy-out and renegotiate their executive contracts.

If you’re an average American worker, however, your paycheck probably didn’t grow as much. The study also found the average weekly wage for an American worker rose only 1.3% in 2013. A chief executive now gets paid 257 times as much as an average worker. That's up from 181 times an average worker's salary in 2009.

Yahoo Finance Editor-in-Chief Aaron Task said the increase in executives' salaries and the flattening of workers' salaries over the last 30 years are linked. On the one hand, he said, CEO pay is rising because the companies are doing well and the consensus is the CEOs are uniquely qualified to do their job. “That becomes a problem when the average worker either can’t get a job or has to work two jobs just to stay afloat."

Due to mounting criticism of CEO salaries, many companies are paying their executives in stock, instead of cash and stock options. This change to compensate executives based on their company’s performance has been very lucrative for them. The S&P 500 rose about 30% last year. The study showed that more than two-thirds of the CEOs in the S&P 500 received a raise in 2013.

The trend of higher executive pay comes as some companies pay their senior staff even if the company performs poorly. Task sited former Target CEO Gregg Steinhafel who received a compensation package for fiscal 2013 of $13 million dollars. While it was a 37% drop from the previous year, Steinhafel still received a $15.8 million severance package after resigning due to a massive data breach and the company’s poor performance in Canada. He also remains with the company as an advisor.

“Being paid for success is one thing, but it’s when these CEOs and other senior executives get paid even when they’re not doing well,” Task said. “That’s when people look and say that there’s a problem here.”

This brings us to the subject of today’s poll question. Is CEO pay rising too much? Vote in our poll, or leave a comment below or on Twitter.