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.
“ CEOs made 254 times more than the average worker in 2021”
Is one out of 254 average workers capable of being the CEO of a leading corporation? If not, the corporation is getting a deal.
Nobody is expecting the janitor to make as much as the CEO. But, one way or the other, pay him enough to live. Yes, with dignity.
Just saying. It’s not socialism.
I don’t disagree with that
Maybe the janitor could make a living wage if 10 or 20 million illegals didn’t drive wages down.
That simply is not a fact. The impact on wages by immigrants even undocumented is negligible if it even exists. Plus even illegals pay billions in taxes, including billions each year to SS and Medicare and never collect benefits.
So you’re saying the laws of supply and demand don’t apply when it comes to labor? Interesting.
I completely disagree.
“The CEO-to- worker pay gap is widening yet again, …”
It is a useful comparison. Granted, the “average” worker is probably doing just fine, but…
What about the lower quintile; the 20 percent who work, sometimes two jobs, and still don’t earn enough to support a family?
Sure, some of them can go to school, many cannot afford to “take a chance”, and that underpaid “slot” will be filled by another worker. The “free market” is an efficient way to allocate resources, including labor, but Adam Smiths invisible hand doesn’t care if you are a product or a person. A product can be put on a shelf, sold at a loss, or written off. A person needs food and shelter, every day. And even maintenance (health care, etc.)
IF the current economic system can’t provide that for even the lowest worker, please don’t kvetch if we increase taxes on the CEO*, or even, proportionately, to those average and above workers, to maintain those lower paid workers. Enlightened self interest, if nothing else.
*sure, celebrities and sports stars too.
What the lowest 20% eRn still nothing to do with CEO pay. That lowest 20% most often do not work in a company run by this group if CEOs.
Meant to say;
“The CEO-to- “average” worker pay gap is widening yet again, …”
Over the years, I have researched the comparison of pay between public and private sector workers. (Because I was one*.)
Sure enough, as claimed, public workers earn more than the average American, when including pension and benefits (mostly health-care)
Also employees of large (over 500 persons) corporations earn more than the average private sector worker, and about the same as public sector workers. In June 2022, the average worker in large establishments earned $55,48/hr. salary +benefits. ($55,47 for public workers)
The overall average worker earned just $38,91/hr. Keeping in mind that the overall average –includes– those in large establishments. Damn averages.
Meanwhile, those in smallest companies earn only $31.49/hr. Including benefits. And we haven’t even gotten to the bottom quintile yet, many of whom just could not survive without government assistance. The question is, is government ( that’s us, you and I) subsidizing the worker, or subsidizing his employer? When the studies say that the U.S. has among the greatest inequality of income of OECD countries, they are –including– the value of government transfers.
I don’t care if the CEO or the VIP or the BMOC earns 254 times the average worker. More power to him. And more taxes.
*one of each, at different times.
I am so sick about hearing how much more a CEO makes. The only thing it means to me is that the board of directors are not doing their jobs in general. Too many CEO run their companies into the ground or bail after making major changes and the next guy gets blamed. Yet, everyone seems to leave with golden parachutes.
I wish companies would focus on long term results in the compensation packages for CEOs instead of daily stock prices that the activist investors want.
Nobody ever talks about their own deferred compensation. In a way I got 3.5% of my wages deferred because of the company match on my 401K. If I had just an IRA, there would have been no match. I am just now starting to collect on that plus gains from the investment over the years. The company didn’t have to offer a 401K and I wish their match was better, but something is better than nothing.
If people want to close the wage gap, go to school, take a chance, change jobs to one that pays more. No job in retail or food service will ever pay as much as the CEO who has thousands of employees. Is the person making fries or stocking shelves responsible for millions or billions of dollars of assets and for the thousands of people who have jobs like a CEO?
I completely agree.
Dick Richard D Quinn Blogging at Quinnscommentary.net and HumbleDollar.com Twitter @quinnscomments