OneWorld.net (U.S.)

WASHINGTON, D.C., Aug 30 (OneWorld) - Chief executives at U.S. defense contractors have seen a 200-percent pay raise since the Sep. 11, 2001 terrorist attacks, widening the chasm between compensation in the corner office and wages on the factory floor, a new report said Tuesday.

Average CEO pay--$11.8 million in salary, stock options, bonuses, and incentives--rose last year to 431 times what the average worker earned, $27,460, according to the report from the Washington, D.C.-based Institute for Policy Studies and Boston-based United for a Fair Economy. In 2003, CEOs had made 301 times their average employees' pay.

The ratio had peaked at 525-to-1 in 2001.

''If the minimum wage had risen as fast as CEO pay since 1990, the lowest paid workers in the U.S. would be earning $23.03 an hour today, not $5.15 an hour,'' the research and advocacy groups said.

The report charged that individual CEOs have profited from the Iraq War, with huge average raises at the biggest defense contractors. To arrive at this conclusion, it looked at 34 of the top 100 defense contractors of 2004. While most firms in the larger group were privately held, the 34 included in the report were publicly traded, meaning that their financial results were easier to research.

The 34 companies covered by the report--firms including United Technologies, Textron, and General Dynamics--made at least 10 percent of their revenues from defense contracts.

At these firms, average CEO pay rose 200 percent from 2001 to 2004--as compared to seven percent for all CEOs.

Examples cited in the report include that of David Brooks, CEO of bulletproof vest maker DHB Industries, who earned $70 million in 2004, up 3,349 percent from his 2001 compensation of $525,000.

Brooks also sold company stock worth about $186 million at the end of last year, spooking investors who drove down DHB's share price, according to the report. Analysts quoted in news stories said investors were worried about large insider stock sales.

In May 2005, the U.S. Marines recalled more than 5,000 DHB armored vests after questions were raised about their effectiveness, the report added.

The board of directors determines how much a company's CEO will be paid. Tuesday's report, the twelfth in an annual series, questioned the soundness of those decisions, charging the largest pay hikes went to:

--''Stock tankers,'' or corporate chiefs who received the most pay in any given year between 1991 and 2004 only to see their company's stock lag far behind the Standard & Poor's (S&P) 500 index in the following year.

--''Pension underfunders,'' or CEOs whose firms maintained the most anemic pension plans for non-executive employees yet who received 72 percent more pay than the average large-company CEO.

--''Tax dodgers,'' or CEOs at 46 large firms that paid no federal income tax in 2003 despite earning a collective $30 billion in profits. ''Some of the savings wound up in the pockets of their CEOs, who made $12.6 million in average pay in 2004,'' the report said.

--''Book cookers.'' In the last ten years, CEOs of firms with shady accounting appeared 18 times on the top 10 lists of highest paid executives, according to the report. ''This includes leaders whose companies were either later found to have committed fraud or were forced to make material restatements of earnings to correct previous overstatements of profits.''

To curb the ''Executive Excess'' that inspired the report and provided its title, the study's authors urged the U.S. Securities and Exchange Commission to foster competitive elections for seats on corporate boards.

''Corporate boards are self-nominating and overwhelmingly made up of current and retired CEOs who have a vested interest in not challenging compensation systems that they themselves benefit from,'' the report said.

The report also said shareholders should have ultimate say over CEO compensation.

''British shareholders must annually approve executive pay, a tradition that has contributed to greater restraint in executive pay than the United States has experienced,'' it said.

CEOs themselves could take action, and the report singled out for praise two bosses worthy of membership in an ''Executive Pay Hall of Fame.''

Brad Anderson, CEO of consumer electronics retailer Best Buy in 2003 decided to forgo $7.5 million in stock options and instead gave them to ''outstanding non-executive employees,'' the report said.

At supermarket chain Whole Foods Market, it added, CEO John Mackey's pay is limited to no more than 14 times the average workers' pay.