TODAY

TODAY   |  July 01, 2013

Report: CEO compensation rises as shareholders lose

A recent study showed that the average American worker’s salary has risen by 5.4 percent since 1978, while the growth of CEOs’ compensation in that time is 875 percent. CNBC’s Jim Cramer reports on why executives are still getting raises even as shareholders are losing money.

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>>> the average american salary has risen by 5.4% since 1978 . over that same period the growth of a ceo's compensation has skyrocketed 875%. for companies with revenues over $1 billion the highest is larry ellison . it rose to 96.2 million in 2012 . 24% increase in the salary. oracle's return to investors was down 22%. the ceo of avtivision was up too. it increased to 64.9 million in 2012 . up 680% while his shareholders lost 12% on their returns. the highest ranking woman, marissa mayer earning $36.6 million last year. is this justified? yim, good morning.

>> good morning.

>> how do they justify this? how do they say $96.2 million is a fair price for larry ellison despite the fact that the shares are down.

>> there's no justification. the process is hijacked by ceo's more powerful than the compensation committee. it's outrageous. he's done nothing for you.

>> how did the board come at these prices? we go to hr, we get a deal of some kind but we have a compensation committee and board of directors that come up at a number. how do they arrive at it?

>> they look at what other ceos are making and say we should aware our ceo the same thing. in ellis's case, he founded the company. this is one that i think was just insane, frankly. i was just shocked to see that he was the leader. he has just been -- let's say he has been horrendous for shareholders.

>> let's say i see my pay stagnated our shares are down 22%. what can i do about the fact that the boss is getting a raise.

>> quit. i would not work at that company. first of all the company is going nowhere and there's companies going better. this is the act that makes american's hate ceos. some make you money but this happens to be one of the worst cases have seen.

>> you bring up a good point. some of these high salaries can be fair. you look at them on paper and you say that's a huge number but when you look at the revenue the company is bringing in it shakes out well.

>> if they're making a lot of money for shareholders i have no beef with that. but when you have a stock down double digits and the guy making the most money -- that's very unfair to all americans and that's the kind of thing you would think congress or the irs would get involved in. we have to stop this.

>> the rich clearly getting richer. jim cramer , thanks so much. you can see him weeknights