Squeeze at the Top

By the same rules.

While the Nixon Administration's wage controls have aimed at holding raises for ordinary workers to 5.5% a year, some top executives have been do ing rather better than that. According to a Business Week survey, Chrysler Corp. Chairman Lynn Townsend last year got a 209% increase in total compensation, to $649,850; TWA President Forwood C. Wiser Jr.'s compensation went up 157%, to $296,298. Such in creases did not violate the guidelines; a company could give its chief an enormous boost, keep the lid on subordinates' raises, and come out with an average 5.5% hike for all employees, which met wage control guidelines. Now, however, the Cost of Living Council has come up with strict new guidelines that make for painful reading in executive suites.

If the new rules go into effect un changed, companies subject to wage control will no longer be able to aver age the chairman's raise with the book keeper's. They must set up an executive control group" comprising all officers and employee-directors who earn $30,000 or more a year. Increases for that group as a whole cannot average more than 5.5% a year, regard less of what happens to the rank and file; if the president gives himself a bigger increase, he will have to hold down the raises of his vice presidents. Executive wage hikes will be measured against the average group salary for the previous fiscal year.

Executive Reaction. The new rules would also put effective limits on bonuses, which often account for the big gest increases in executive compensation. The COLC wants to limit bonus increases to 5.5% also. It has cushioned the blow by letting companies choose the base year against which the boosts can be measured; firms may go back to November 1968 and pick the fattest intervening bonus year as the base.

Executive reaction has been predict ably hostile. More than 140 companies accepted a COLC invitation to comment on the new rules by Sept. 17; nearly 90% denounced them. Many objected that management will find it difficult to at tract top-quality people on short notice.

If a new executive is lured from another company at a lush salary, his arrival will automatically hold down the raises of his new colleagues. Another common complaint is that executives will have less incentive to work hard to raise prof its, if a doubling of profits increases their bonuses only 5.5%.

The COLC probably will not issue final regulations for two or three weeks, but it seems unsympathetic to the executive gripes. It has pointed to some of the big raises at the top, and suggested that when management and labor sit down to negotiate, tempers-- and the na tional economy -- might be soothed if both had to play by the same rules.

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