According to a new white paper from the Economic Policy Institute, if you count all the ways CEOs are compensated, both actual pay (options realized) and estimated pay (options granted) -- stock options, long-term incentive payouts, salary, etc. -- CEOs of the top 350 American firms made nearly 273 times more than the average American worker in 2012, as shown in the graph above.
The average compensation for CEOs last year was $14.1 million, up 37.4 percent from 2009. It's the second straight year CEOs have seen strong growth, "which stands in stark contrast to the typical workers’ stagnant pay since the beginning of the recovery in 2009," the report says.
What's amazing is that CEO pay is also growing relative to the wages of the most highly-skilled workers, those earning in the top 0.1 percent.
But how would it impact the economy if CEO pay was scaled back? It wouldn't harm it.
“The shocking increase in CEO compensation is not a reflection of the market demand for talent—it’s the result of the fact that CEOs have considerable control over their own pay and significant incentives to demand a greater and greater share of company profits,” said EPI President Lawrence Mishel, in a statement. “If CEOs earned less or were taxed more, there would be more money for workers with no adverse impact on employment or economic growth.”
Here are more findings from the report:
- From 1978 to 2012, CEO pay including realized stock options grew about 875 percent, a rise more than double stock market growth and substantially greater than the 5.4 percent growth in a typical worker’s compensation over the same period.
- In 2010, CEO compensation was 4.7 times greater than that of the top 0.1 percent of wage earners, a ratio 1.62 higher than the 3.08 ratio that prevailed from 1947 to 1979.
- CEO-to-average worker pay ratio peaked in 2000 at 383.4-to-1, was 20.1-to-1 in 1965, and was 273-to-1 in 2012.
[h/t Washington Post]