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Horribly rich bosses: How do they get away with it?

ONCE UPON A TIME - when the local founding Pew family was still in control - workers at Sunoco's sprawling Marcus Hook refinery joked about working for "Uncle Sunny," the kind of company in which a generous health plan for early retirees was negotiated with a simple handshake.

ONCE UPON A TIME - when the local founding Pew family was still in control - workers at Sunoco's sprawling Marcus Hook refinery joked about working for "Uncle Sunny," the kind of company in which a generous health plan for early retirees was negotiated with a simple handshake.

But today the dwindling number of time-clock punchers at the region's largest oil refiner say that they're so shell-shocked from the loss of 400 jobs at Sunoco's shuttered South Jersey site, a looming pension freeze and news that workers under 50 now won't be getting that retiree health coverage, they cringe at what might be next.

"Your blood pressure is up from the time you check in until the time you leave," said Dave Miller, president of Local 10-901 of the United Steelworkers, which represents some Marcus Hook workers. His union cohort, Mike McLain, nodded in agreement: He was six months shy of his 50th birthday when Sunoco killed off the future-retiree health benefits for its under-50 workers.

But at least one Sunoco employee did all right by "Uncle Sunny" in 2010: its CEO, Lynn Elsenhans.

Elsenhans arrived at Sunoco in 2008 to carry out an aggressive program of cost-cutting. That apparently did not include her own compensation package - which rose last year by a staggering 524 percent, to more than $11.7 million.

Although last year's pay boost for the CEO of the Philadelphia-headquartered oil giant - in an era of salary and pension freezes for so many blue-collar workers - was certainly larger than most, it also highlights a surprising trend.

A Daily News survey of 51 CEOs of publicly traded companies in Philadelphia and its nearby Pennsylvania suburbs - firms in which the leadership didn't change and have reported their 2010 data - found that their average pay raise last year was a whopping 32.6 percent.

Not that Philly's CEOs were hurting in 2009, when their average compensation was more than $3.38 million. But, last year the typical top boss got a raise that topped $1 million, to more than $4.48 million.

Their pay hikes on steroids - including bonuses and other things that you probably didn't get, like stock and pension benefits, on top of base salary - is more than 10 times higher than the average American worker's raise of just 2.7 percent.

The New York Times reported earlier this month that average CEO raises nationally were 23 percent - meaning that Philadelphia is slightly ahead of the curve.

An expert on executive pay - Eleanor Bloxham, of the Ohio-based Value Alliance - has one word for the new CEO pay binge at a time of 9 percent unemployment and cutbacks for everyone else:


"Isn't it insanity to keep doing this, to keep doing what isn't working?" asked Bloxham, referring not just to 2010 but to year after year of outlandish pay raises for top executives supposedly tied to performance - when the overall performance of American companies seems to keep getting worse.

Needless to say, that's not how they see it in corporate board rooms.

"Sunoco's future success depends on us being able to attract and retain the people with the skills we need to help us manage through a very challenging market environment, and our compensation structure, which is competitive and in line with market rates, reflects that goal," said Thomas Golembeski, the company's spokesman.

Golembeski noted that CEO Elsenhans' compensation took a steep hit in 2009, when Sunoco's stock performance was weak, but she was rewarded last year for outperforming Wall Street.

Of course, many of the moves by Elsenhans that boosted the oil company's stock price - like the freeze in a defined-benefits pension plan, which for now affects nonunion workers, or the 400 furloughs of workers at the closed Eagle Point refinery - inflicted pain on her employees, or former employees.

Comcast: Private jets

Officials at cable-and-entertainment goliath Comcast said that Philadelphia's highest-paid CEO - Brian Roberts, who got a 14 percent compensation boost last year to just more than $31 million - was rewarded with a higher bonus because Comcast stock was up sharply in 2010. Indeed, large CEO pay packages are pretty common in the high-flying media business, where most well-known leaders are paid in the $20 million to $40 million range.

Roberts stated publicly at the depth of the recession that he was essentially freezing his base salary at Comcast - $2.8 million last year - but that didn't apply to his entire package, including bonuses.

There are other perks that CEOs get and you don't. The company says that it requires top executives, such as Roberts, to fly on corporate jets - even for personal travel - for security reasons. The Wall Street Journal recently reported that Comcast purchased its third corporate jet - a Dassault Falcon 900, worth $40 million or more - last July. The jet made dozens of trips to Martha's Vineyard or Palm Beach, two vacation paradises where Roberts owns homes.

Although Roberts' 14 percent raise was indeed less than the average CEO got both nationally and in Philadelphia, it's higher than what a typical blue-collar cable technician could expect.

Rich Spieler, a business agent for the International Brotherhood of Electrical Workers who handles three units of Comcast employees - the overwhelming number of whom are nonunion - said that the IBEW recently negotiated annual raises for technicians and other workers at one site of 2.9 percent, close to the national average. At another unit in Pleasantville, N.J., where bargaining has dragged on, the company is offering annual raises of just 0.5 percent, Spieler said.

"They are a bad, bad company - they want givebacks on everything," Spieler said, adding that he's fighting proposed changes to overtime rules.

Cigna: 131 percent raise

The growing gap between CEO pay and rank-and-file income is a situation cloaked in irony: Corporate boards and the broader markets generally dole out performance rewards to bosses who raise profits by keeping worker costs down - making income disparity grow larger by the year.

One reason that U.S. companies are able to give large pay packages is that they're sitting on record levels of cash - $1.8 trillion, it was reported last summer - that they aren't using to hire new workers.

There are other ironies. Health-insurance firms, like Cigna - which has been based in Philadelphia but is moving its top brass to Connecticut - suffered at the end of the last decade because high layoffs and steep cuts in worker benefits meant that fewer workers could get insurance.

President Obama's health-care plan - approved over the objections of many business leaders - was an eventual boon to insurance-company stocks because it mandated coverage, and many CEOs reaped the benefits in 2010.

Cigna's CEO, David Cordani, saw his pay spike by 131 percent last year, to more than $15.2 million, which would make him the second-highest-paid CEO in Philadelphia, if he weren't abandoning the city. His performance bonus was increased by 49 percent.

A spokesman for Cigna, Gloria Barone Rosanio, said that Cordani's raise reflects the fact that he was promoted to CEO only in late 2009 and that his 2010 compensation is in line with bosses of similar firms.

Cigna also reported spending $48,733 to install a security system at Cordani's home. Cordani's predecessor, Edward Hanway, saw protests at his house in Media in 2009 from activists angry over medical bills that the insurer refused to cover.

Indeed, some may wonder why more protests haven't been made over the disparity between pay for CEOs and for the middle class - a gap that has grown dramatically since the early 1980s.

According to one study, the typical CEO earned 42 times more than his average company employee in 1980, but that ratio has skyrocketed to 343 times today. And experts say that such high CEO compensation is a major reason income disparity in the United States is the greatest it has been since the eve of the Great Depression - and why the CIA World Factbook says that the wealth gap in America is now far worse than in European nations and on a par with the Ivory Coast or Yemen.

Why rich grow richer

Why do we now have such a great income disparity? Some experts say - in yet another irony - that the sudden decline in America's then-stable, manufacturing-based economy in the 1970s caused board members to wave cash at CEOs who they thought could make firms more competitive in the suddenly tough environment.

During the 1980s, steep cuts in the top marginal income-tax rates on the wealthy - which under President Ronald Reagan went from 70 percent at the start of the decade to 28 percent by the end - also offered a new incentive for higher pay at the top. (Levies on the middle class actually rose under Reagan, meanwhile, because of an increase in the payroll tax for Social Security.)

Leslie McCall, an associate sociology professor at Northwestern University who's writing a book on income disparity in the United States, said that unions - which began shrinking in influence in the 1970s and '80s - had once helped to keep the gap smaller.

"In the 1970s, you had kind of a backlash," McCall said. "The economy had been growing, but then there was this period of decline and employers were able to go on the offensive against regulations and the unions."

McCall noted that despite the conventional wisdom that everyday Americans don't mind high CEO pay, because they hope to get rich themselves someday, most public-opinion voters show that U.S. voters actually aren't happy with the gap between rich and poor. She said that people worry that the rich are gaining an edge in areas like access to college and influencing the political system through large donations.

But, despite public opinion, elected officials in both parties aren't eager to tackle the problem. Last year's Dodd-Frank financial-reform bill included a tepid measure that companies must make public the ratio between their CEO and average-worker pay - and now Republicans who retook the House are pushing to have that repealed.

Bloxham, the compensation expert, said that retail investors have the power to block the most outrageous CEO pay increases through proxy votes, but they rarely do. Currently, shareholders reject executive pay packages only about 1.5 percent of the time.

Most blue-collar workers - told that they're lucky just to have jobs after a recession - feel that they have no leverage at all. At Marcus Hook, the Steelworkers' local leader Miller said that he expects a push to apply the pension freeze to unions, or maybe even to put the local out of business - given the threat of layoffs or replacement by outside contractors.

"You feel like a 1,000-pound brick is hanging over your head," said Miller, who added that workers have lost the sense of security that they felt when Sunoco - originally the Sun Co. - was largely owned by the Pew family that co-founded it back in 1886.

And the idea that blue-collar workers could gain raises anywhere on the magnitude of what the average CEO got in 2010 isn't even on the union's radar screen in Marcus Hook.

Said Miller: "We just want to preserve what we already have."