quote Originally posted by aceman: It's $2.70/gallon for gas here. Still lower than it was in the 70s when you factor in inflation.

People say that, but they're comparing today's prices to the highest gas prices since 1918. Not really a good baseline for comparison.



Adjusted to 2007 dollars, gas has stayed under $2.50 a gallon from 1942 until 1979. In 1979 the prices went from about $2 to over $3 during the "Energy Crisis." That price spike wasn't considered normal supply and demand. It was in the wake of the Iranian Revolution following the fall of the Shah of Iran. The price started falling again around '82 or '83 and continued falling until 2000.

So if you want to consider the '79 Energy Crisis a good economy, then today's gas prices are fine. Judging by prices since 1918, adjusted for inflation, a reasonable price for gasoline would probably be between $2.00 and $2.50.

[This message has been edited by Formula88 (edited 08-04-2007).]

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Executive Compensation

Pay for top executives soars
CEO pay continues to set new records. According to Business Week’s annual survey of executive pay, compensation for CEOs of major U.S. corporations averaged $12.4 million in 1999, having increased sixfold since 1990. Last year alone, executive compensation rose an average of 17 percent. The average worker, in contrast, received a 3.5 percent pay increase. The chart at left shows how recent pay increases for top executives compare with those going to the average worker.


Sources for Chart: "Worker increase" is based on the wage and salary component of the Bureau of Labor Statistics’ Employment Cost Index for all civilian workers. "CEO increase" is drawn from Business Week surveys of executive compensation.


More reliance on stock options
The composition of executive pay has changed markedly in the past two decades. In 1979, Lee Iacocca became the first prominent executive to receive a major portion of his pay in the form of stock options. Since that time, and especially over the past 15 years, the use of stock options has exploded. Long-term compensation (primarily in the form of stock options) accounted for 81 percent of average 1999 pay for the CEOs of the top 365 U.S. companies, according to Business Week.

Does "at risk" pay improve performance?
Shareholder activists and groups concerned with corporate governance have generally favored stock options and other mechanisms intended to link executive pay to company performance. By putting a larger portion of pay "at risk," they argue, top executives will have an incentive to increase the returns on shareholders’ investment.


One problem with this argument is that much "at risk" pay is not actually at very much risk at all. The typical grant of stock options will pay off even if it is a general bull market, rather than exceptional performance by the company itself, that boosts the value of the stock. Federal Reserve Chairman Alan Greenspan, among others, has advocated indexing options so that a stock would have to outperform the market or a peer index in order for the options to have value. The practice of repricing options when a company’s stock falls further weakens the relationship between executive pay and company performance.

Big raises for job-cutters
There are other problems with the use of performance-based pay to spur corporate executives. The measures used to gauge performance are typically short term, raising the danger that executives will be encouraged to pursue short-term gains at the expense of the workforce – and of the company’s long-term performance. In fact, it’s not unusual for CEOs to receive big pay increases while their companies are laying off frontline workers. For example, American Express fired 3,300 workers in 1997. That same year, its CEO’s compensation package soared 224 percent, to $33.4 million. That figure includes $27 million from the exercise of previously-granted stock options.

Executive pay fuels income inequality
The pay of the average worker has not increased at nearly the same rate as pay for those at the top, fueling the trend toward greater income inequality. A worker making $25,000 a year in 1994 would have earned $107,513 in 1999 if his or her pay had grown at the same rate as pay for CEOs. Had the minimum wage grown as fast as executive pay since 1994, it would be more than $18 an hour instead of its current level of $5.15.

U.S. out of step with rest of world
CEO pay is much higher in the United States than in other countries. That’s true both in absolute dollar terms, and relative to pay for the average worker. According to Business Week, an American CEO earns 475 times as much as an average blue-collar worker. German CEOs make, on average, just 13 times as much as a typical manufacturing worker. The ratio in Japan is 11 to 1. The chart at left shows how pay for U.S. CEOs compares with that of their peers in other countries.


Statistics in Brief

High Performance
Work Systems

Productivity
and Growth

Executive
Compensation

Employment in
Major UAW Industries

Employment Situation

U.S. Light
Vehicle Sales

Consumer Prices

International Trade

SEC Website

Noteworthy News



Sources: Business Week "Executive Compensation Scoreboard" (April 17, 2000 and past years); New York Times, "Report on Executive Pay: In the Options Age, Rising Pay (and Risk)" (April 2, 2000); AFL-CIO, Executive Pay Watch (www.aflcio.org/paywatch)

[This message has been edited by 84Bill (edited 08-04-2007).]

[This message has been edited by 84Bill (edited 08-04-2007).]