On the surge in CEO compensation
Economic Policy Institute has published a new study on the surge in CEO compensation:
Summary
What this report finds: This report looks at trends in chief executive officer (CEO) compensation, using two different measures. The first measure includes stock options realized (in addition to salary, bonuses, restricted stock grants, and long-term incentive payouts). By this measure, in 2017 the average CEO of the 350 largest firms in the U.S. received $18.9 million in compensation, a 17.6 percent increase over 2016. The typical worker’s compensation remained flat, rising a mere 0.3 percent. The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965 and more than five times greater than the 58-to-1 ratio in 1989 (although it was lower than the peak ratio of 344-to-1, reached in 2000). The gap between the compensation of CEOs and other very-high-wage earners is also substantial, with the CEOs in large firms earning 5.5 times as much as the average earner in the top 0.1 percent.
The surge in CEO compensation measured with realized stock options was driven by the stock-related components of CEO compensation (stock awards and cashed-in stock options), not by changes in salaries or cash bonuses.
Because the decision to realize, or cash in, stock options tends to fluctuate with current and potential stock market trends (as people tend to cash in their stock options when it is most advantageous to do so), we also look at another measure of CEO compensation, to get a more complete picture of trends in CEO compensation. This measure tracks the value of stock options at the time they are granted. By this measure, CEO compensation rose to $13.3 million in 2017, up from $13.0 million in 2016.
By either measure, CEO compensation is very high relative to the compensation of a typical worker—and an earner in the top 0.1 percent.
Dan shocked at CEO compensation. OMG!
Dan – Judge Judy make 45 million a year. Every football player is in the 1%. Many ball players are making well north of $20m.
Dan just hates CEOs.
And Judge Judy as well as football players in comparison have far greater value than you or your coveted CEOs.
CEOs typically make that big money even if they screw up and destroy the value of the company. I hate that.
In addition to being priceless to their respective organizations, these paragons of leadership obviously need the recently passed tax relief. And the coming capital gains tax relief to remove the burden of their stock option gains………….
Runny, a few names for you to look up:
I Noyi Pepsi
T Cook Apple
B Tyson Kaiser Permanente
S Nadella Microsoft
S Pichai Google
L Page Alphabet
Any of these would make your beloved Judge Judy look like a fool.
And if you love the Judge, do you also love Kim Kardashian? She earned north of $50m in 2017 – 4 times the CEO average.
Income/wealth in America is not all what you think it is.
ahhh Brucey:
Who said I liked her? If you say its bad, its gotta be good.
A CEO is not an entertainer. A CEO is not the product. A CEO is not the bearer of the good will. A CEO is not the brand. A CEO can be changed and the product will still exist. (And no, we’re not talking management screw ups.)
The Judge (stupid show but…) and athletes are entertainers and paid accordingly to eyes watching. You know, free market and all. Plus, they are the product, they are the worker that produces the product. The are the sole bearers of the good will. They are the brand. Thus, the worker is paid appropriately. And specifically paid based on productivity.
Unlike a CEO who can only make such money due to the number of employees they are standing on. Yes, their employees are the foundation to their pay. No employees, no product going out the door.
That is the difference.
Certainly, any CEO is free to actually make a living without workers to produce the product.