CEOs of Colorado’s small businesses deserve a raise.
They earn a median salary of $175,000 while their counterparts nationwide make $233,500, according to a survey released Thursday by compensation consultant .
CEOs in Alabama and Mississippi make more. The only states in the . survey where CEOs make less are Nebraska, Missouri and New Hampshire.
. surveyed 2,237 businesses with 500 or fewer employees. About 80 percent were publicly traded, and 20 percent were private.
CEOs on the coasts make considerably more money than those in the flyover states. They, of course, must cope with the higher costs of mansions, penthouses, car services and five-star cuisine. CEOs on the coasts also tend to run larger enterprises.
One reason Colorado ranked among the lowest-paying states for CEOs is because most of its companies are on the small end of the small-business scale. And the smaller the small business, the smaller the rewards.
That’s not surprising to Michael Ebedes, a partner in auditing firm Grant Thornton’s Denver office who works with Colorado CEOs. He said the . results reflect the mix and size of Colorado companies and won’t dampen anyone’s enthusiasm. “Colorado is a great place to live, and that attracts CEOs,” he said.
Well, maybe small CEOs.
The smartest advice I ever heard from a businessman goes something like this: It can take just as much time, effort and aggravation to do a small deal as it does a big one. But somehow, the big ones pay exponentially more.
The national median CEO salary at companies with 500 to 5,000 employees is $500,000, . reports. At companies with more than 5,000, it’s $849,375.
The pay skyrockets at Fortune 500 companies, where the average CEO bagged $10.8 million last year, according to a recent analysis by the Institute for Policy Studies and United for a Fair Economy.
At the pay grade of a small- business CEO in Colorado, it would take nearly 62 years to bag what a Fortune 500 CEO makes in just one. And the average American worker? That would take 364 years, according to the Institute for Policy Studies and United for a Fair Economy report.
It’s great that we live in a country where some people can get paid extraordinary sums for a job well done. It’s not so great when that compensation isn’t determined by market forces or job performance — but rather the chummy board members and their financial games.
Most recently, Wall Street has been paying its executives enormous amounts of money to make subprime loans. These loans are now defaulting at an extraordinary rate, triggering more than $50 billion in losses and thousands of job cuts.
But is this going to affect year-end bonuses at investment banks?
Nope. Despite these losses, big money from mergers and acquisitions is still rolling in, and just in time for Christmas.
Average bonuses for managing directors at investment banks will range from $2 million to $2.5 million, up 10 percent from last year, and that was a record year, according to recent media reports.
So what kind of bonuses will CEOs of small businesses receive by contrast?
“Over 40 percent of small- business CEOs we surveyed said that they didn’t receive any short-term incentives in 2007,” said Christine Midwood, director of survey services for .
. found that CEOs of publicly traded companies, even the small ones it surveyed, earn considerably more than their counterparts at private companies.
“They have to have greater insight into their company’s financials,” Midwood said. “Generally, they have greater responsibility and greater visibility.”
They also have a greater number of shareholders to pinch.
So here’s the lesson I gleaned from all of this: If you’re going to be a CEO, do it at the biggest company that will hire you, make sure the public is buying your stock, and don’t take a job in Colorado.
You’d be better off working in Mississippi — where the average pay for a small-business CEO is $222,449, more than $47,000 a year higher.
That would get you to the one-year pay of a Fortune 500 CEO in only 48 years.
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to him at ., 303-954-1967 or alewis@denverpost.com.
