Study: CEO pay on steep rise while workers’ wages stagnate

Top executives at the nation’s largest firms are getting paid nearly 300 times that of the average worker, a new study showed on Thursday.

The left-leaning Economic Policy Institute study showed that CEOs were paid an average of $15.2 million in 2013, 296 times more than a typical worker, according to an examination of CEO compensation at the top 350 publicly traded firms.

{mosads}“The fact that CEOs make almost 300 times what workers make should set off alarms,” said EPI President Lawrence Mishel.

“CEOs are making more and more while workers are making less — even when worker productivity is skyrocketing,” he said. 

The ratio of CEO-to-worker compensation has risen sharply in the past 50 years: it peaked at 382.4-to-1 in 2000, and has been climbing again since the end of the recession five years ago.

Executives’ salaries are up 2.8 percent from 2012, and 21.7 percent since 2010, the report said.

Since 1978, pay for the top executives has increased 937 percent, more than double the gains in the stock market and even outpacing the earnings of the top 0.1 percent of wage earners.

Compensation for the typical worker, meanwhile, grew 10.2 percent in that time.

“It’s clear that this is not simply CEOs being fairly compensated for making firms more productive,” Mishel said. 

The report argues that large gulf between the CEO pay and other very high wage earners casts doubt on the claim that top executives are being paid for their special skills.

“Instead, CEOs are exerting their influence to command outsize compensation packages,” the report said.

“CEOs could easily be paid less, or be taxed more, with no adverse impact on productivity or employment.”

The report suggests numerous ways of curtailing the growth of executive pay such as raising marginal tax rates on top earners, removing the tax break for executive performance pay and setting corporate tax rates higher for firms with higher ratios of CEO-to-worker compensation.

Changes in corporate governance, including use of “say on pay” policies, which allow shareholders to vote on top executives’ compensation, would also potentially limit pay levels.

The ratio is calculated by determining the compensation of a typical worker in each industry and comparing it to what CEOs are paid in that industry. Those ratios are then averaged to find an overall ratio.  

Tags Economic Policy Institute Employment compensation Executive pay

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