On that basis, the Australian market had not seen the end of very high corporate pay packets, he said. Shareholders are particularly enraged by pay increases granted to chief executives of companies where earnings have fallen. And some people get paid lots of money just to leave. Mr Chernin's pay packet is large even by the standards of major US companies. The average chief executive earned 475 times the average blue-collar worker's wage.
Many chief executives justify their pay on the grounds that they have enhanced the bottom line.
Analysing data from more than 700 companies from the 1980s to the early 1990s, a recent US study found that the average chief executive's pay increases, bonuses and option grants were just as large when a company's profits or stock price rose due to luck as when luck played no part. However, the National Bureau of Economic Research study found the heads of well-governed companies, with a few outsiders on the board and large shareholders who monitored executive pay, received much less pay for luck than their peers in other companies. The authors concluded good corporate governance increased the efficiency of executive pay schemes. In 1998, it looked to the US to find someone to restructure the company and revitalise earnings. He has short-term incentives and key performance indicators to meet.