That ever-widening gap between CEO and worker pay

Great Divide: CEO and Worker Pay
Gap Reflects Failures in Corporate Governance
By TIM ANNETT

The gap between the economy's biggest earners and typical workers is growing, and economists see an array of forces at work widening the divide.

Slightly less than half of the economists surveyed in this month's WSJ.com economic forecasting survey said they believe the broadening gap between CEO and rank-and-file pay reflects a failure of corporate-governance practices to maintain a proper relationship between compensation and performance. But 37% of the economists see a combination of forces at work -- there are corporate-governance failures, but also a correctly functioning marketplace that rewards performance and scarcity.

"Increasingly, superstars are demanding outsized compensation," said Richard DeKaser of National City Corp. "But at the same time, that's not the whole story. Institutional aspects are in play as well. Compensation committees generally don't like to pay CEOs below the median" rate of compensation, he said.

Outrage over booming executive pay is growing again amid investigations into practices such as the backdating of stock-options grants, and the issue is finding resonance as worker incomes have made little headway in recent years. Indeed, according to Labor Department data, the median wage -- adjusted for inflation -- rose 3% from 2000 through 2005, with the largest gains flowing to the best-paid workers.