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CEO Compensation Is Skyrocketing

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In the dot-com revolution, there's a war on for talent.

CEOs for new economy companies make almost double what old economy executives did. That's driving up salaries and changing the rules, reports CBS News Correspondent Anthony Mason.

Demand for labor remains high because the unemployment rate held steady in March, at 4.1 percent. That helped drive worker earnings up .4 percent, to an average $13.60 an hour.

Some of the workers most in demand are getting a lot more than that.

"It's absolutely huge. Compensation is skyrocketing," said Jeff Christian of Christian & Timbers.

"In fact, compensation that used to average around $250,000 for an early stage company CEO can go as high as a million a year today. Because pretty much all the bargains are gone."

The average pay for a CEO, including salary and stock options, is now nearly $12 million.

"Today, you're not a successful CEO in the new economy, unless you've made a billion dollars worth of stock options" (including stock appreciation).

  • Tim Koogle of Yahoo earned $1.7 billion last year.
  • AOL's Steve Case earned $1.1 billion.
  • Cisco System's John Chambers earned $337 million.
Nell Minow thinks this kind of compensation is "indefensible."

Since last summer, Minow has been collecting and analyzing CEO contracts and publishing them on her Website the Corporate Library.

"I think the worst contract I saw was for the CEO of Global Crossing," says Minow.

Robert Annunziata, hired last year by the telecom company Global Crossing was given:
  • a $10-million signing bonus.
  • stock options worth $20 million
  • a Mercedes and first-class roundtrip airfare for his family to visit once a month (including his mother)
After all that, Annunziata was fired in March. But Minow says rarely are CEO's made to pay when they don't perform.

"We want CEOs to be a little greedy," explains Minow. "That makes them good CEOs. But what we also want, though, is directors who'll say: 'Yeah. Sure, you ask for the moon. Of course, we'll pay you the moon. We'll pay you half the moon now and the other half when the stock goes up.'"

One search executive compared the new CEO to sports heroes. They can ask for the moon, because they have become the stars.