Building an Economy that Works for Everyone

Median CEO Pay Passes The $10 Million Mark For First Time

Executive at AirportThe median CEO pay package hit $10.5 million last year, according to the Associated Press, cracking eight figures for the first time since the wire service began calculating the statistic.

The median compensation number rose by 8.8 percent from 2012 and has now climbed by more than 50 percent over the past four years. By contrast, average weekly wages for working Americans rose just 1.3 percent last year, the AP notes. That disparity is all too typical of the modern U.S. economy. CEO compensation has increased 127 times faster than worker pay over the past three decades.

According to the wire service’s figures, the ratio of CEO pay to worker pay now stands at 257 to 1. That is a slightly more optimistic portrait of the relationship between earnings at the top and middle of the income distribution than other recent analyses. The real ratio of CEO to worker pay is more like 273 to 1, according to the Economic Policy Institute, and in some sectors of the economy it is as high as 1,200 to 1.

There are a variety of different methods for determining what a typical CEO earns, and the AP’s estimate confirms some other recent analysis of 2013 compensation for the top officers at large public companies. A USA Today review earlier this year found the same $10.5 million median figure. But that earlier analysis was based on a smaller pool of companies — 200 of the S&P 500, as opposed to 337 of those companies captured in the AP study — so Monday’s figures strengthen the evidence that median CEO pay has breached the $10 million mark.

Corporations can afford to reduce the gap between top earners and frontline employees. Even after taxes, corporate profits hit a record $1.68 trillion last year. These companies are holding about $2 trillion in profit offshore to avoid U.S. taxes. Big business icons like Walmart and McDonald’s could start paying their workers enough to escape poverty with only negligible 1 to 2 percent increases in their prices.

The escalating disparity between CEO and worker pay could potentially be justified if top executives were being rewarded for excellent performance in demanding leadership positions. But that’s not how it works. CEOs are effectively guaranteed to get their performance incentive payouts, either because the performance targets are set so low or because compensation boards will decide to make the payments even when the company misses its targets. Incompetence and malfeasance are no obstacle to massive paydays either, as more than one in three of the highest paid CEOs of the past two decades were fired, prosecuted for misconduct, or bailed out by taxpayers.

Via ThinkProgress

  • Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More To Read

April 17, 2024

2023-24 Impact and Gratitude Report

Reflecting on a year of progress and transition at Economic Opportunity Institute

April 12, 2024

Welcoming our New Executive Director, Rian Watt!

EOI is excited to begin its next chapter under new leadership

April 4, 2024

Is There a Valid Argument Against Cost-Free College in Washington?

Cost-free college is a meaningful investment that would change lives. What's stopping Washington from making it happen?