In 2021, median CEO compensation reached $20 million, a 31% increase from the year prior, due to big jumps in stock awards and cash bonuses based on market performance and company productivity. CEO pay consists of wages, as well as extremely lucrative bonuses, long-term incentives and, most importantly, stock options, which comprise around 85% of CEO compensation, according to Lawrence Mishel, a distinguished fellow at the Economic Policy Institute.
The CEO-to-worker pay gap is widening yet again, as top executives who took pandemic pay cuts more than recovered lost earnings in the last year.
CEOs made 254 times more than the average worker in 2021, up 7% from the year prior, according to the Equilar 100, which offers an early look at CEO compensation among the largest companies by revenue that filed 2021 proxy statements by March 31.https://www.cnbc.com/2022/04/18/ceos-made-a-median-20-million-last-year254-times-more-than-the-average-worker.html
As you read and hear such reports, keep a few points in mind:
- There is no relationship, nor should there be between CEO compensation and worker pay. What does the pay gap mean? There are all forms of pay gaps. Celebrities and sports stars create pay gaps – funded by average people.
- The use of “CEO” is inaccurate, those numbers do not apply to CEOs in general, but to a select few CEOs of the very largest companies employing tens if not hundreds of thousand of workers.
- Few workers would want the majority of their pay not guaranteed and at risk as applies to CEOs.
- Do the math. Divide CEO compensation by the number of employees and see the impact on each worker and then consider the impact of higher pay for workers based on CEO pay on corporate net earnings.