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CEO pay raises jump a median of 27% in 2010, report finds

Hammergren
American CEOs raked in fat paychecks last year, as head honchos netted a median 27% increase in compensation in fiscal year 2010.

Top executives from the S&P 500 scored a median 36.5% bump in realized compensation after two years of pay declines in 2008 and 2009, according to the ninth annual report from research group GMI.

It’s sure to irk Occupy protesters, who have railed against the high-flying lifestyles of the 1% while the average American works more for less money and cuts back on spending.

The total chief executive earnings, calculated from more than 3,200 proxy statements, include base salary, pension and retirement plan payments, exercised options and more.

Among the list of the top 10 highest-paid executives -– all men -– three came from healthcare companies and four were collecting exit packages from retirement or termination. Of the top five, three landed single-year pension and deferred compensation boosts of $14 million.

More than 70% of all chief executives were given restricted stock awards while 53% ended up with stock options, whose median profits soared to $1.3 million last year from $950,400 in 2009. Among the S&P 500, bosses saw perks jump 11%.

John H. Hammergren, chief executive of healthcare company McKesson Corp., led the list with nearly $145.3 million in compensation, including a base salary of $1.6 million and more than 3.3 million exercised stock options that scored him a profit of $112 million.

Other chief executives in the top 10 included Thomas M. Ryan of CVS Caremark Corp. and Ralph Lauren of Polo Ralph Lauren Corp.

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Income for the top 1% has soared over last three decades

Six Wal-Mart heirs are wealthier than U.S.' entire bottom 30%

-- Tiffany Hsu

Photo: John Hammergren of McKesson is the highest-paid chief executive according to research group GMI. Credit: George Nikitin / Associated Press

American CEOs raked in fat paychecks last year, as head honchos netted a median 27% increase in compensation in fiscal year 2010.

Top executives from the S&P 500 scored a median 36.5% bump in realized compensation after two years of pay declines in 2008 and 2009, according to the ninth annual report from research group GMI.

It’s sure to irk Occupy protestors, who have railed against the high-flying lifestyles of the 1% while the average American works more for less money and cuts back on spending.

The total chief executive earnings, calculated from more than 3,200 proxy statements, include base salary, pension and retirement plan payments, exercised options and more.

Among the list of the top ten highest-paid executives – all men – three came from health care companies and four were collecting exit packages from retirment or termination. Of the top five, three landed single-year pension and deferred compensation boosts of $14 million.

More than 70% of all chief executives were given restricted stock awards while 53% ended up with stock options, whose median profits soared to $1.3 million last year from $950,400 in 2009. Among the S&P 500, bosses saw perks jump 11%.

John H. Hammergren, chief executive of health care company McKesson Corp., led the list with nearly $145.3 million in compensation, including a base salary of $1.6 million and more than 3.3 million exercised stock options that scored him a profit of $112 million.

Other chief executives in the top ten included Thomas M. Ryan of CVS Caremark Corp. and Ralph Lauren of Polo Ralph Lauren Corp.

Six Wal-Mart heirs are wealthier than U.S.' entire bottom 30%

Walton
Does an annual income of $150,000 make a person rich? Depends on whom you ask.

As Americans fret over how to tax the rich and Occupy protesters rail against the 1%, new reports find that the definition of wealth is a tenuous one.

First, some context: The wealth of the 1% is about 225 times greater than that of the typical family, compared to 125 times in 1962, according to analysis from labor economist Sylvia Allegreto with UC Berkeley.

And based on the most recent data, the cumulative wealth of the Forbes 400 was $1.54 trillion -- equal to the worth of the bottom half of American families.

That means the $69.7 billion held by the six Walton relatives of Wal-Mart founders Sam and James Walton in 2007 was equal to the net worth of the bottom 30% of Americans, according to Allegreto.
Today, she said, the Walton pot is estimated to be around $93 billion.

Household net worth from July to September fell 4% to $57.4 trillion in its sharpest drop since September 2008, the Federal Reserve said Thursday.

The median income to be considered “rich” is $150,000 a year, according to a new Gallup poll -- a threshold that has increased since 2003, when Americans said they’d be rich with $120,000 a year.

But among different groups of people, what makes one “rich” seems to be relative -- just as the meaning of “luxury” changes for Americans.

About 15% of respondents said it would take $1 million a year or more to fall into that category. But three in 10 say that they’d qualify as prosperous even pulling in less than six figures.

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More than 90% of consumers buy luxury as it embraces mani-pedis

Luxury
The vast majority of Americans are embracing the luxury market -- but that’s at least in part because the definition has broadened since the recession, according to a new report.

It’s not just Mercedes-Benz cars or Cartier watches that count as luxurious purchases, according to research group Ipsos Mendelsohn in data posted on AdAge. Many consumers now consider a Prius, an upgrade to a current wedding band or even a manicure-pedicure as a high-end buy.

Luxury isn’t the same as it was five years ago, 65% of wealthy people said. Instead, it can involve smaller and more intimate expenses in addition to grand purchases.

Nearly nine in 10 of survey respondents said they bargain-hunt while shopping for luxury goods while only a quarter said discounts lowered the perception of luxury.

Within those relaxed parameters, 94% of people from households with at least $100,000 in annual income said they’ve made at least one luxury purchase this year, while 70% plan to do the same in 2012. Even in lower-income households, 92% picked up a luxury item or service and 60% intend to also do so next year.

Ipsos Mendelsohn said the luxury industry pulls in $1.6 trillion a year, 18% from the auto sector, 12% from personal insurance and 11% each from home and gardening, education and groceries.

The rest of the pie is split between travel, apparel and accessories, leisure, entertainment, dining, charitable donations, personal care, electronics, alcoholic beverages and more.

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-- Tiffany Hsu

Photo: Jerome Favre / Bloomberg

The 1% more likely to volunteer, care about politics, study finds

PHILANTHROPY
A common perception of the 1% has the wealthiest Americans living isolated from the rabble, more concerned with dusting off their top hats than helping the country.

A new report from Northwestern University begs to differ.

Compared to the general public, members of the moneyed minority are much more likely to volunteer their time and money in charitable causes and participate in politics, according to the “Survey of Economically Successful Americans and the Common Good.”

Researchers and professors from the university and the NORC research group at the University of Chicago compiled a random sample of 104 individuals from Chicago-area households with a median worth of $7.5 million.

Participants were interviewed in person or over the phone for at least 45 minutes, according to the report, which was funded by the Russell Sage Foundation.

Nine in 10 of the respondents said they volunteer, especially in areas such as education, poverty and the needy, private and community foundations and youth development. A typical member of the 1% donates about 4% of his or her income to charity, the report found. Those who inherited their wealth tend to give an even higher percentage. 

The affluent crowd is also far more likely than that average Joe to be interested in politics, the study said.

Half of 1%-ers said they have reached out to a member of Congress, a White House official or a federal regulatory agency official at least once the last six months, compared to the quarter of the general public that tried to contact an elected official in the last 12 months.

Nearly all of the well-heeled group said they voted in the last presidential election and 84% say they pay attention to politics most of the time. And 64% said they’ve contributed money to a political candidate within the last four years.

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Consumer Confidential: MyFord upgrade, wealth gap widens

Ford
Here's your I-melt-with-you Monday roundup of consumer news from around the Web:

— Ford is getting some upgrades. Ford Motor, stung by falling quality ratings because of its glitch-prone MyFord Touch system, is planning a major fix that it hopes will fix the problems. Early next year, Ford is sending flash drives with a software upgrade to approximately 250,000 U.S. customers with MyFord Touch and MyLincoln Touch, the equivalent system in Ford's luxury Lincoln brand. Owners can do the upgrade themselves in about 45 minutes, or dealers will do it for free. Ford is still deciding how it will offer the upgrade to 200,000 buyers outside of the U.S. MyFord Touch, which debuted last year on the Ford Edge, replaces traditional dashboard knobs and buttons with a touch screen. Drivers control climate, navigation, entertainment, phone calls and other functions using touch or voice commands.

— The wealth gap between young and old is widening. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data. Although people typically accumulate assets as they age, that ratio is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago. The analysis reflects the impact of the economic downturn, which has hit young adults particularly hard. More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover.

— David Lazarus

 Photo: Ford Motor Co. / AP Photo

Weak stock market may be hurting weak economy, report suggests

Luxury-spending-MariahTauger-LAT
Is the stock market a mirror that simply reflects what's going on in the underlying economy? Or is it a force unto itself, actually pushing the economy up or down?

That question -- whether there's a "wealth effect" or, in today's troubled economy, a "reverse wealth effect" -- has been debated a lot over the years. But it's getting renewed attention lately as investors, corporate managers and just about everybody else try to make sense of the stubbornly weak economy.

The basic question is whether the dramatic gyrations in the stock market -- and to lesser degrees, in the fixed-income and commodities markets -- affect consumer and business spending.

A new report from Merrill Lynch suggests the answer may be yes -- that the stock market is weighing on the economy because its acute fluctuations are so psychologically unsettling.

"Market expectations can be self-fulfilling in the short-run; the equity market can create its own reality," economists Neil Duta and Ethan Harris write in their report "The chicken or the egg?"

"In an environment of high uncertainty, the economy is more vulnerable to financial shocks," they wrote. "A sharp negative shift in investor sentiment can feed on itself, reducing economic activity. This is the big risk for the economy today."

Merrill points to the stock market's deep selloff last month after the U.S. government's credit rating downgrade by Standard & Poor's. The economy was weak but wasn't demonstrably worsening. But the selloff was so severe that it raised worries that the economy was sinking quickly.

The report quotes two prominent experts bemoaning the negative effect of the market.

“On days without much news, the market is simply reacting to itself," said Robert Shiller, a Yale University economics professor. "And because anxiety is running high, investors make quick, sometimes impulsive, responses to relatively minor events.”

And this from famed hedge-fund manager George Soros:

"If a double-dip recession was in doubt a few weeks ago, it is less in doubt now because financial markets have a very safe way of predicting the future: They cause it."

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It's not 2008 all over again — yet

Americans are saving more in 401(k) retirement plans

Small investors feel -- what else? -- gloomy

-- Walter Hamilton

Photo: Shoppers wander down Rodeo Drive outside the Salvatore Ferragamo store in Beverly Hills. Credit: Mariah Tauger/Los Angeles Times

 

 

Young people (seem to) support Warren Buffett's tax idea

Warren Buffett President Obama is meeting stiff resistance from Republicans on his proposal to increase taxes for people earning more than $1 million a year.

But here's one group who at first blush appears to support him: Americans younger than 30.

More than 80% of young people support Warren Buffett's call to hike taxes for high-earners, according to a survey by Our Time, a nonprofit group.

The survey was conducted over Facebook -- how else to conduct a survey of young people? -- and the group claims that less than 9% oppose the proposed tax hike while slightly more than 7% favor an across-the-board 15% flat tax for people of all incomes.

In an opinion article that has stirred heated debate, Buffett, the so-called Oracle of Omaha, wrote in the New York Times last month that the George W. Bush-era tax cuts for people earning more than $1 million a year should be done away with.

The billionaire said he paid slightly less than $7 million in taxes last year, which sounds hefty until put into context. That was only 17.4% of his taxable income -- far less than the rate paid by his secretary or any of the other 20 people in his office, he said. Their tax rates ranged from 33% to 41%.

Obama has dubbed his proposal to raise taxes on people earning more than $1 million a year the "Buffett rule."

However, it would be a stretch to say taxation of those people has stirred deep passions among young people.

One woman wrote emotionally about the issue on Our Time's Facebook page: "Our generation has to get 'mad as hell' about how our country is being run and realize that it is US who are going to need to do something about it."

But although a news release from Our Time says the survey was "open" to more than 5,000 of the group's "fans," it appears from the Facebook page that only 154 people actually voted.

The survey respondents don't need a degree in statistics to know that the response rate is hardly a representative sample. And the topic generated only a handful of comments.

Then again, young people probably have a lot more pressing concerns than Buffett's tax idea. Such as getting a job in the current economy or paying off heaping student-loan debt.

RELATED:

Why (and how) to tax the super-rich

Warren Buffett plans Chicago fundraiser for Obama

Warren Buffett invests $5 billion in Bank of America

-- Walter Hamilton

Photo: Warren Buffett. Credit: Chip Somodevilla / Getty Images

 

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