Executive Pay Rises, But Gap Widens

EXECUTIVE PAY RISES, BUT GAP WIDENS

February 1996
EXECUTIVE MEMO

Executive Pay Rises, But Gap Widens

A

s if the massive furloughs resulting from two partial shutdowns of the government weren't enough, career federal executives got more unhappy tidings late last year. They found out their compensation still lags behind that of corporate executives-and the gap is growing.

The gap between the income of members of the Senior Executive Service and their counterparts in the private sector ranges between 43 percent and 131 percent, according to a Hay Group study. The Senior Executives Association (SEA), which commissioned the study, announced the bad news on Dec. 5, in a bid to convince President Clinton to grant federal executives both the 2 percent nationwide raise and locality hikes that other federal employees received for 1996.

SEA got its wish. On Dec. 12, executives were granted 1996 locality boosts ranging from 2.05 percent to 2.82 percent. Then, on Dec. 28, President Clinton ordered that executives receive the 2 percent nationwide raise, too.

The Hay Group study found the executive income difference has grown since 1994, when the gap ranged from 35 percent to 114 percent. The study compared total cash compensation, including bonuses and other awards-which added up to an average of $3,262, or 3 percent of salary, per SES member-with corporate compensation, including stock options, bonuses and commissions.

When Hay focused just on base salaries, the gap narrowed, but federal executive pay still fell 15 percent to 35 percent short of corporate pay.

The new 1996 pay rates, which range from $94,800 to $115,700, may help close that gap. But they also bumped some SESers' pay high enough to qualify them for post-employment lobbying restrictions.

SEA intervened, winning a waiver of the restrictions from the Office of Government Ethics.

NEXT STORY: Meltdown