CEO compensation increases to $19M annually
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The richest 5 percent of Americans have captured 74 percent of the wealth created in the country from 1 983 to 2010, according to a report by the Economic Policy Institute.
WASHINGTON POST
The top executives of America’s biggest companies saw their average annual pay surge to $18.9 million in 2017, according to a report released Thursday, fueling concerns about the gulf between the nation’s richest and everyone else.
The dramatic 18 percent jump in chief executive pay came as wages for American workers remained essentially flat, pushing the gap between executive compensation and employee pay to its highest point in about a decade.
The rise in executive pay shown in the report by the Economic Policy Institute, a left-leaning think tank, is driven largely by the big increases in the stock market over the past year. The bulk of CEO compensation is made up of stock grants or stock options, which can lead to substantial pay days for CEOs when companies perform well in the market. The Standard & Poor’s stock market index jumped 14.5 percent in value from 2016 to 2017 when adjusting for inflation, EPI said.
From 2009 to 2017, average pay for the nation’s CEOs jumped by $7.8 million, or by 72 percent, according to the report. Over that period, the average wages and benefits for a typical American worker rose from $53,400 to $54,600, or by about 2 percent, the report said.
“It speaks to the degree the economic recovery is unbalanced,” said Larry Mishel, an economist who has tracked the CEO-worker pay ratio for two decades and co-authored the report with Jessica Schieder.
EPI’s $18.9 million figure is an average of CEO compensation among the 350 largest U.S. companies and includes the value that CEOs have realized from stock options, as well as salary, bonus, restricted stock grant awards and other longterm incentive payouts, the report said.
As a result, that figure appears different from other analyses about CEO pay. A CEO pay report done by the executive compensation research and governance firm Equilar for the Associated Press, for example, found a median pay increase of 8.5 percent in 2017, to $11.7 million. The AP’s analysis used a median figure, looked at 339 executives and included the value of stock options on the day they were granted.
The finding comes as experts have pointed to skyrocketing wealth inequality as a growing public policy problem in the nation, with the richest Americans pocketing a disproportionate share of the economic growth.
The gap between CEO and worker pay was larger in 2000 and 2007, reaching a ratio of 344 to 1 in 2000 and 327 to 1 in 2007, compared with 312 to 1 in 2017. But Mishel argued that fact should provide small comfort, because the 2000 gap was fueled by a tech bubble that later burst, while the 2007 gap preceded the worst economic catastrophe in a half-century.
The Securities and Exchange Commission now requires companies to calculate and publish their own CEO-to-worker pay ratio as part of the 2010 Dodd-Frank banking law passed after the Wall Street crash. Unlike the EPI data, the SEC’s CEO-to worker pay ratio includes essentially all of the companies’ workers, domestic and international. (There are some exceptions, and the company can exclude some of its foreign workers, per the SEC rule.)
The richest 5 percent of Americans have captured 74 percent of the wealth created in the country from 1 983 to 2010, according to a report by the Economic Policy Institute.
WASHINGTON POST
The top executives of America’s biggest companies saw their average annual pay surge to $18.9 million in 2017, according to a report released Thursday, fueling concerns about the gulf between the nation’s richest and everyone else.
The dramatic 18 percent jump in chief executive pay came as wages for American workers remained essentially flat, pushing the gap between executive compensation and employee pay to its highest point in about a decade.
The rise in executive pay shown in the report by the Economic Policy Institute, a left-leaning think tank, is driven largely by the big increases in the stock market over the past year. The bulk of CEO compensation is made up of stock grants or stock options, which can lead to substantial pay days for CEOs when companies perform well in the market. The Standard & Poor’s stock market index jumped 14.5 percent in value from 2016 to 2017 when adjusting for inflation, EPI said.
From 2009 to 2017, average pay for the nation’s CEOs jumped by $7.8 million, or by 72 percent, according to the report. Over that period, the average wages and benefits for a typical American worker rose from $53,400 to $54,600, or by about 2 percent, the report said.
“It speaks to the degree the economic recovery is unbalanced,” said Larry Mishel, an economist who has tracked the CEO-worker pay ratio for two decades and co-authored the report with Jessica Schieder.
EPI’s $18.9 million figure is an average of CEO compensation among the 350 largest U.S. companies and includes the value that CEOs have realized from stock options, as well as salary, bonus, restricted stock grant awards and other longterm incentive payouts, the report said.
As a result, that figure appears different from other analyses about CEO pay. A CEO pay report done by the executive compensation research and governance firm Equilar for the Associated Press, for example, found a median pay increase of 8.5 percent in 2017, to $11.7 million. The AP’s analysis used a median figure, looked at 339 executives and included the value of stock options on the day they were granted.
The finding comes as experts have pointed to skyrocketing wealth inequality as a growing public policy problem in the nation, with the richest Americans pocketing a disproportionate share of the economic growth.
The gap between CEO and worker pay was larger in 2000 and 2007, reaching a ratio of 344 to 1 in 2000 and 327 to 1 in 2007, compared with 312 to 1 in 2017. But Mishel argued that fact should provide small comfort, because the 2000 gap was fueled by a tech bubble that later burst, while the 2007 gap preceded the worst economic catastrophe in a half-century.
The Securities and Exchange Commission now requires companies to calculate and publish their own CEO-to-worker pay ratio as part of the 2010 Dodd-Frank banking law passed after the Wall Street crash. Unlike the EPI data, the SEC’s CEO-to worker pay ratio includes essentially all of the companies’ workers, domestic and international. (There are some exceptions, and the company can exclude some of its foreign workers, per the SEC rule.)