what's the breakdown between cash and stock? pretty sure back in 1978 it was almost all cash and most of the current pay is stock. no one pays a CEO $200 million in cash or similar numbers

So we should endeavour to become CEOs I guess?

As it turns out, the CEO makes the company more than 400x the amount of an individual worker. Pay is really just cash in compared to cash out, mixed with supply/demand for the position

The dollar was taken off the gold standard in 1971. The anchor that kept prices in check was cut loose, and here we are.

A while back I worked for a national company with over 30K employees. Company decided to cut every employees salary 10%. CEO received a 20 million dollar bonus that year. Funny how that works.

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The article says it accounts for stock compensation as well as base salary in the very first paragraph.

Last year my company made record profits for the 3rd year in a row. Then they told us they couldn't afford to give us cost of living increases for our annual raises. Then they gave the CEO a 15% raise🙃

Is this average or median salaries? I’m guessing that a relatively small number of CEOs raise the average alot.

Because they have so much merit. Look what a paradise they created.

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Do you really believe this? What is the frictionless mechanism by which a worker can get fair compensation for the value they bring to the company? Quit their job? That sounds smart...

Could this also be due to companies getting significantly larger since 1978, with the CEO having more underlings and this supposed greater responsibility?

Honest question. How does the history of CEO pay / market cap compare? Can't seem to find this online.

Sounds a lot like the company I work for

Good question!

“For the pay of the typical worker, we use average compensation (wages and salaries plus benefits) of a full-time, full-year production or nonsupervisory worker (a group that makes up about 80% of the private-sector workforce).”

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This kind of shit should be outright illegal. Cut salaries or have a large layoff? Should be criminal to get a bonus, increased pay, etc. for at least a year following the event.

CEO pay, or CEO compensation? Those are two very, very different things.

Why they only have one life. You make 4 lifetime in one year

But they don’t. You could simply cut a CEO out of a company for months if not years an nobody would ever know. Try doing that with the average workers and then tell me which one makes the company more money.

It’ll never happen but we need laws capping max CEO pay at some percentage of the average employee salary.

I’m not saying they’re essential to the business, I’m just saying that a CEO coming up with a restructuring model, once, can save millions of dollars a year for a big company. There’s really nothing that a grocery store cashier can do that will save the store millions of dollars, and the labor of a single cashier make turn the store 10 or 20 thousand dollars a year. It’s just a matter of scale. Someone making big decisions that impact hundreds or thousands of workers has a way bigger impact than someone on the frontline of the business. That’s why you want to find a really really good one, and to do that you’ll need to pay what they ask for, because if you don’t, another company will and you’ll lose your guy.

Well, they are 399 times smarter and work 399 time header, so… /s

Unionize. That’s how you get shit done. Weekends, 8-hour days, minimum wages, all of those were started by unions. I do really believe that’s how the world works, because that’s what I went to college and studied on for four years.

It’s unbelievably fucked, but that’s how capitalism works. Higher level executives make a much bigger impact, even though the frontline worker works harder and has a tougher job. But that doesn’t matter for wages. It’s not based on how hard you work, but instead your wages are based on money in compared to money out, and the supply/demand for the labor for your role.

I get the merit behind that, but if it were true, it would be an amazing financial hack that shareholders can use to cut expenses. Instead, it's an unbelievably competitive market to attract and hold executive talent, so it seems clear that the market supply and demand drives that salary growth.

Athletes, actors, musicians and artists all dwarf CEO pay. Funny how you conveniently left them off the list.

Good question!

"We focus on the average compensation of CEOs at the 350 largest publicly owned U.S. firms (i.e., firms that sell stock on the open market) by revenue. Our source of data is the S&P Compustat ExecuComp database for the years 1992 to 2021 and survey data published by The Wall Street Journal for selected years back to 1965. We maintain the sample size of 350 firms each year when using the Compustat ExecuComp data"

I agree! I'd like something like a top executive to lowest paid worker compensation ratio balance requirement.

I didn’t read through everything but I’m surprised they didn’t mention the change in CEO pay law that was passed in 1993. The Clinton administration attempted to limit tax reductions for CEP pay to 1 million.

The law backfired and CEO pay increased much more dramatically than before the law passed. It was so filled with loopholes that companies could reduce their tax burden if they provided CEOs with stocks. For example one company went from 300K CEO pay to 7.74 million.

Here’s a good summary link

A Times article defending "gazillion-dollar salaries": https://time.com/5566816/ceo-pay-income-inequality/

I also think those rules should apply to union bosses(and anyone else who’s salary is paid by union dues) and members of Congress. They should get paid a fixed percentage of the average salary of those they represent plus a stipend for flights to and from DC when Congress is in session(one flight in, one flight out per session, but only if they actually fly to and from DC)

None of who you listed produce material goods that lives depends on. They’re individual entertainers, not corporations. I don’t think they’re in the same realm of, say, a pharma company selling drugs at a 600% markup.

But make the comparison to Japanese or German CEOs compared to American CEOs and you start to see how much of outlier the americans are

If you're a company that has multi-billion dollar profits, it makes sense to pay millions for a CEO who can improve profits by even just a percent compared to a cheaper one and this is the justification you'll often see used - as companies have gotten bigger, the potential value a CEO can bring increased and so their compensation does too.

Just one small problem - at the far end of the bell curve the differences in skill are lost entirely to statistical noise and what studies exist show that CEO pay depends primarily on factors outside their control - I.e. Luck.

this article gets posted like 8x a day.

companies have grown drastically since 1978. International commerce is huge

Fortunes largest company in 1978 was GM with 3.3billion in profit

today the largest company (by revenue) is walmart at 143billion in profit, apple was 170billion.

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The 350th largest company in 1978 was Tyco, with 8400 employees

today the 350th largest company is Air Products, with 19000 employees.

Again, if they are that valuable then why not just hire a great CEO and fire everyone else. If he is worth 400 regular workers then he should be able to manage just fine.

Sorry, I don't deny that good management is important but it simply is not that valuable that one person should be a multi million / billionaire while every one under them has to buy food stamps.

There is a fuck ton of sample bias here. Clearly the data was chosen to draw the desired conclusion.

First, they’re just picking the salaries of the 350 largest companies’ CEOs. So the CEO sample size is 350, which lacks statistical significance / rigor. Not only that, you’re picking probably 350 of the ~1,000 highest salaried most successful people in America. I don’t think that is a fair representation of overall CEO pay. It would be like looking at the salaries of NBA all-stars and claiming amateur basketball players are overpaid. There’s been a ton of corporate consolidation in the last 40 years, which means the largest 350 firms have gotten meaningfully larger. Also picking the top-350 means you’re only seeing CEOs who are tremendously successful, so likely to make more money on merit. Lastly a lot of CEO comp is options in company stock, which are worth more when the company performs well (as the top-350 would be expected to do) and benefit generally from mass stock market appreciation over the last 50 years.

I get it. but shareholders care about making the max amount of money and they don't give a shit if a CEO is rich or broke. The fact that the market has driven exec. wages up shows that there's a value add there. it's depressing and unethical, but the free market has demonstrated that it is a worthy expense if you want to remain competitive.

I think the conversation should start at legislation that regulates the free market so we don't do this to ourselves, not a question of whether or not they're worth paying that much. If they weren't worth it, nobody would pay them that much. that's it.

It’s the CEOs of the top 350 companies only, so basically CEOs of $100+ billion companies only. It’s not even the entire S&P500. Huge sample bias - obviously people running a $100 billion company are going to be high comped, and they are a highly highly successful group.

This data basically doesn’t apply to the standard small business or even a normal mid-to-large enterprise

Yup. I work for a large Japanese company and this is true. Kinda proud of this fact, NGL! Sooooooo tired of the perpetuating myth of the CEO as God or “the smartest -that’s why he’s the CEO” BS. I think these myths are spun to justify this ever growing gap. Although this myth has been around for a long time, long before this gap got as crazy big has its gotten relative to average worker pay.

To be fair they are running much bigger businesses nowadays than in the 70s.

What company?

Almost _ any _ company

End of the day, American workers and voters have got to stand up and do what the French are doing now. But the elites are too good at dividing them with racial, gender, class division smoke and mirrors (not saying that discrimination doesn't exist but they leverage it with media etc to distract us)

So the CEO of a 100 person company would be paid the same as the CEO of a 100,000 person company? It would need to scale somehow.

It does scale with the lowest paid worker.

The market doesn't determine anything. It's such a cop out. They arent worth it there is nearly zero impact.

If you don't like it don't work there

"How dare you question my outrage!" - every child in an adult body on this sub

No, instead focus on blaming others for your misery

You may not think they are that valuable, but if it isn't your company your opinion doesn't matter.

Not worth it to you maybe, but if it's not your company your opinion doesn't matter

Not worth it to anyone. There have literally been studies that show ceo impact is basically a statistical error. They basically do nothing. The only reason they are massively overpaid is because they are budies with the boards which often consists of other ceos and rich people.

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It must be worth it to someone or they wouldn't pay it. You don't get to decide what is worthwhile to others.

Can you even read my responses? Ceo impact is a rounding error this isnt debatable its empirical fact.

If you pay 20k for a piece of dog shit it doesn't suddenly make the dog shit more valuable.

You apparently don't understand that other people get to value things differently than you.

Your measure of worth is not the same as everyone else on earth.

CEO compensation theater is simply a distraction from real economic issues.

The fact of the matter is, the workers individual contribution has become less and less valuable as time goes on. There was a time when strikes could cripple an entire industry now for most jobs it seems like hiring humans is practically a courtesy. They could easily automate so much of the work that is currently being done, they just don't want to put in the up-front investment to do it. Currently most of the increases in profit at companies comes from executive decisions and adopting new tech, and less from acquiring new workers.

No I just can recognize a scam when I see it. It's not an opinion when there is empirical data.

So in other words ceos that get paid mostly in company stock which has vesting periods and other restrictions.

A form of compensation that most workers would not want because they rather have cash to pay their bills.

It's not surprising the change.

It seems to roughly correlate with the s&p 500 because that's how stocks and company value has grown.

Even if that’s true (which it’s not), the U.S. economy is still overwhelmingly dependent on individual consumers’ expenditures — 69-70% of US GDP, 12-15% of global GDP. If executives want to sustain their ability to make profits, they need to provide workers expendable capital. Gotta feed your sheep if you want to keep fleecing. Middle and lower classes tend to spend money when they have excess. Rich people don’t. This is not sustainable.

The economy does not run on consumption. This such a ridiculous statement it just shows how incredibly naive and trusting supposedly intelligent people can be. Once techno-capital can automate every human task and implement it's own automated security force, there will be no need for human consumption and no need for labor.

The numbers may be empirical, but whether it is worth it or not is a matter of opinion.

Is $5,000 a lot of money? Opinions will vary, but the amount in question is the same.

You are basically arguing you feel internships should be abolished because no company would commit to hiring them.

You are also ironically pushing the idea of everyone working from home so they don't need facilities staff which tend to be unskilled labor that is low paying. This would reduce unskilled labor opportunities and place a burden on the labor market.

So software companies would be allowed to have better compensated CEOs than say a 10 person mom and pop store that needs to hire part time college students as cashiers. Assuming of course the mom and pop store can pull in enough money based on the ratio.

Furthermore you are pushing forth the idea that a newly hired person at the lowest level should be paid the same as the person with multiple years of experience otherwise reducing the CEO compensation. This would ironically lead to infighting among the workers when new hires are getting paid the same as experienced workers but not being productive.

The ratio idea basically pushes companies to not want to hire inexperienced workers and want to outsource all unskilled labor. Those consultating companies will drastically increase the cost of everything and the production costs increases.

However it misses the biggest issue. You think it will give better pay to lower paid workers but in reality they're isn't any cash for that pay in most companies without increasing the cost of goods and services. Instead you are basically telling companies they can't give as much stock to their CEO and that's about it. Lower paid workers don't want company stock and they certainly don't want the value of their compensation to be based on company performance.

No need for humans at all in your dystopian scenario, apparently.
I cited one of a dozen sources that disagree with you about what percentage consumerism has and continues to contribute to the economy, but please feel free to call it ridiculous instead of bringing facts into the discussion. “Automation can” is not “has”, but you do you boo. Been fun, have a good one.

Get those bootstraps ready!

So you agree the entertainment industry should not pay them so much right?

R&D is expensive. Plenty of failed drugs happen. You think mRNA vaccines just happened overnight? No, it's been decades of research, much of which resulted in failure. They were being researched back in 1980s.

https://www.nature.com/articles/d41586-021

https://cihr-irsc.gc.ca/e/52424.html

The reason most pharmaceuticals cost so much early on is to recover that r&d cost so they can continue doing research.

Now I am not trying to argue that pharmaceutical companies are never greedy or that they are somehow being fair with the pricing. It's just a bit more complicated than you are making it.

It's like saying instead of paying millions to these actors, why don't they pay less and give the money to pharmaceutical companies to fund the research so medicine can be cheaper for all.

>No need for humans at all in your dystopian scenario, apparently.I cited one of a dozen sources that disagree with you about what percentage consumerism has and continues to contribute to the economy, but please feel free to call it ridiculous instead of bringing facts into the discussion. “Automation can” is not “has”, but you do you boo. Been fun, have a good one.

The people who own AI systems will not replace themselves. And they will have no fucking scruples about knifing the rest of humanity in the back if they can get away with it.

You can just look at the s&p 500 growth and see the bullshit. Stocks grow in value, CEOs get paid mostly in stock ergo compensation has increased dramatically. Most workers don't get paid mostly in stock and likely don't want to so the compensation gap increases.

Give me 10x a typical worker wage and 389 employees and I’ll bring more value to any company than a CEO

Good point. Also , this is again, a case of the classic supply and demand function of economics. There is a reason why these massive companies are willing to pay big bucks to attract and retain CEOs. There is a very limited talent pool vs a huge demand for experienced and reputable executives out there.

BTW, Your NBA example is just fantastic, it’s a different league the CEOs are in than the average workers, they should be paid as much. Instead of being disgruntled at the pay discrepancy, one should seek to work and study harder to climb the corporate chain in order to get paid more.

But this is mostly in Public companies traded in the stock market. Regular CEO’s don’t get paid that much.

I disagree 1000%

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I made $6000 in 1978 and $154,000 last year. Doing better than the CEO’s - I am up 2,500% in the same timeframe.

That’s why I said it’s a mix of money in/money out AND supply/demand. It’s very cheap to replace a cashier

My company gave 4% cost of living plus 2% bonus to everybody (before merit increases, even). We're notoriously cheap, but that's more than I've seen them give in 16 years. I was pretty surprised.

Really we should be doing what the French were doing about 230 years ago

Imagine if we all started growing our own food and quit working for just 1 week.

There's no day like today

Thanks. Would be interesting to see CEO and worker compensations in the same subset of companies and separate salary from stock options.

I’m pretty sure that’s all in there.

These stats are specifically for the top 350 public companies in the US

I mean people are welcome to be upset about how much top public company execs are paid. The data should simply be presented as such and clearly labeled. This is done to find the most extreme possible disparity without adequately highlighting the limitations of the data, all with the sole goal of outraging people rather than informing them. It’s incredibly misleading and unethical in my view.

>obviously people running a $100 billion company are going to be high comped, and they are a highly highly successful group.

So you imply that there were no highly successful big companies in 1978?

I feel like we need a law: the highest paid total compensation to an employee of a company cannot be more than 10x the lowest.

If CEOs want to make more money, then they should have to pay everyone else more first.

Lots of CEOs are paid $1 annually. Just one example of how the rich will always be able to pay accountants to figure out loopholes while the poor suffer.

We are family at 'generic company name'

That’s not a big barrier. (To make it scale).

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Costco ceo cut covid pay (admittedly was a temporary pay) and then gave himself and his cronies a big raise around the same time

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Only 1,460%? That's not much. Oooooooh, You ment 1460%!

You get it. Average mouthbreather doesn't, and only whines that they're not in on non existing money.

The numbers are there to confuse the tax payers and boy does it show.

> A form of compensation that most workers would not want because they rather have cash to pay their bills.

As if CEOs don't have bills to pay. That's not the reason.

401ks came out in 1980. Since then it seems it’s been “every man for themselves”

This seems appropriate here…

https://wtfhappenedin1971.com/

It's amazing that you said all that, and none of it is true or relevant. Nothing is stopping companies from having janitors, nor forcing companies to pay someone with no experience, the same as someone with 5 years experience. There is plenty of cash in most companies to pay low wage workers. If there isnt enough money in a company to fairly compensate staff then they shouldn't be in business.

Not this again! Just let the CEOs get paid! If you had the ability to be the CEO, then you wouldn’t be complaining.

Ours didnt give us our bonus because "our nps was too low". We just switched from a system where we were in the 90s to a new one in December that was scoring everything as negative, even good reviews.

bUt HoTdOg PrIcE!?!?

Why? They earned it.

Better give them more because they are irreplaceable geniuses!

Blame the boards that give bonuses based on things like cutting costs with no restrictions on it.

You include all compensation including stock options and bonuses

Some questions I did not see answered in the article:

1 Does the average "typical worker pay" include the global workforce?
I imagine all of these companies in the study operate in developing countries and would therefore lower the average worker comp.

2 What is the domestic company payroll budget now vs then? How many employees are on payroll?
The feminist movement has greatly increased the workforce (for better or worse). If company output hasn't matched this offset, overall pay has to go down. This is actually a major driver of household inequality. If 2 jobs now are economically equivalent to 1 to 1.5 in 1978, how can a single-earner or single parent household even dream of keeping up?

You guys literally believe anything you read on the internet don't you

If somebody wants to start revolution. Count me in.

Just to put in perspective: 400 times is around 33 years, let's say you work since 18 years old, so it's up to 51 years. So a CEO in ONE MONTH makes as most of your entire productive life.

Most CEOs are paid in cash as well, but the majority is in stock, which is taxed at a lower rate than if they were to receive their higher compensation in cash.

Oh, "policy" is the solution? Big surprise that an article full of sample bias and partial information wants to introduce government intervention as the solution.

Maybe more run of the mill employees having board seats and being compensated in stock along with cash would improve earnings disparity. CEOs would be less inclined to lay people off to protect the bottom line. Worker/shareholders have more incentive to increase profits, lower costs and to make sure they don’t lay people off.

You set the CEOs max pay as a percentage of the average workers salary, with the percentage on a sliding scale where CEOs of companies with more employees get a larger percentage. Cut employees, cut max CEO salary. Set max bonus’s as a percentage of gross company profit. No more bonus for CEOs when the company posts a loss.

What is nps.

Was that in the US? Costco Canada made covid pay permanent.

They ended the COVID hazard pay ($2/hr), but increased starting pay by $1/hr and made adjustments across the board

Net promoter score. Basically the survey question where they ask how likely you are to recommend a company or product.

“Net promoter score” would be my guess

Thanks. I will nps your comment 1/1.

Nice that you got something, but I think CPI was 7%, so they still came out ahead

Data is beautiful, but the results are horrifying.

Better than getting a 3% increase in a place with 9.5% inflation rate.

It’s a place that knows you’re losing money but makes you feel like you won

We were congratulated on a great 2022 and given a 2.5% raise to go with the increase to our benefits that basically cancelled out the 2.5%.

I think a big part of this is a larger percent of companies have a global customer base. Software companies especially can scale near infinitely with the same number of workers/developers. Due to this the value of the company (which CEO compensation is typically tied to) goes up much higher than if the company was only available in a single country.

It never does.

Unpaid internships are predatory.

Working from home is generally a net positive. I'm a facilities staff. Idc if everyone works from home, cut my job. I'll find a different one. And not every job can be remote anyways.

Large software companies already have better compensated CEOs then mom and pop stores. Obviously. If a small business fails because it can't pay it's employees a fair wage, then it shouldn't exist. Or it needs less employees. (Also the point is to pay the lower level employees more, which allows those employees to have enough money to shop at that local store instead of needing to go to Walmart to save every extra dollar)

If an employee has been with the company for several years and hasn't received a raise in that time... that's really not on the new employee. Also, capping a CEOs wage does not mean everyone else just gets paid the same all of a sudden. It's lessening the gap between the lowest and highest paid worker. Everyone else in between can be (and should be) adjusted as well.

That paragraph doesn't even make sense.

Assuming there actually isn't any extra cash (even though many companies do have extra cash) then absolutely many employees would enjoy and benefit from receiving stock options. I've worked at a place that did profit sharing, and a place that gave stocks as part of the total compensation. Both times I worked as a low level employees. Both times it made me appreciate the company more, have more pride in the work I did (as I was DIRECTLY profiting of my quality of work), and most importantly I was ending up with more money. Because stocks can be sold. For money. That's why CEOs are rich.

And I'm opening to hearing alternative ideas to fix the ever widening income inequality that is destroying the economy.

We look at CEO as the highest position a working class stiff can achieve. But what if CEO is the lowest position a member of the ruling elite can be stuck with? Like, how do I study to be a CEO? How often do they pick the hardest worker for this position? How would i even get a board of directors to trust me with thier company? The only people who get there do it by serving those more powerful then them. The invisible puppeteers. The CEO doesnt do anything that isnt in the best interest of the shareholders. They're just the piñata for the working class stiffs to knock around while the strings are being pulled elsewhere. If you come from a family that owns gem mines or has created and destroyed nations then sitting in an office talking to peons all day is a punishment. Its hazing for the club that runs the world.

And the grift has gotten more intense. The heist is in its final stages. The proportionate amount of money hasnt gone up. The value has gone down for every one.

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My point is, that is very difficult to do. Probably by design. You can try to put some sort of limit on pay and to accommodate for all compensation, but you will never be successful. People make careers out of figuring out how to circumvent those types of rules.

Yeah they gave us 3% last year. And when people asked, "But what about inflation?" the executives stuck their fingers in their ears and purchased some more stock buybacks. And then wondered why our turnover rate was so high last year.

The stock grants are taxed as income. The stock appreciation is capital gains. But if you were given cash and bought stocks, you'd also get the same capital gains tax, so it's not really the tax advantage you think it is.

Ah those ones where either all responses are considered positive or all responses are considered negative depending on if the purpose is to brown nose or to drag people through the mud and they give you an extra free text field with a limit of 100 characters or something, and it's just a text input not a textarea, and that character limit isn't warned about before clicking submit.

Actually communism is evil so we should give them another raise. I dont know why that makes any sense but it has been made very clear to me that I have to believe it so lets give them a raise. I dont like it either but what are you gonna do, vote for a new bourgeoisie? dont be ridiculous there is no democracy

Salary or stock grants?

The majority of CEO income is stock grants.

The size of companies has grown significantly since 1978 therefore any compensation tied to stock will have also grown significantly.

I couldn't agree more with your statement, good sir. Data is beautiful, but also frightening if the right parameters, sample, population, calculations etc are not selected appropriately for the question you ask about the data. When these categories are not chosen correctly for your data calculations, then you can misrepresent any point very easily. So much as removing a potential outlier can have significant impacts on the final representation of said data.

So many comments mentioned how this set of data was unfair because it did not include smaller corporations with CEO's, or didn't account for the type of pay they were receiving in comparison to company employees. Those sorts of questions would require additional data and calculations, and could also water down results and muddle the point the graphic/author wanted to make.

On the other side of things: I agree that there is a sample bias here over all, but the intent was to see a glimpse of merely the top 350 company CEO's income disparity over a long term period. Further investigations into the data could be done to see if the initial graphic is still significant or not.

This is just my two cents from being a student in stats. Take it, leave it, burn it, hate it, be my guest. =P

I'll take "things that didn't happen for $400".

Salary cuts almost never happen like this, layoffs are preferred.

This is how you end up with a company in a death spiral because no one wants to work for nothing.

Picking the 350 largest companies which have grown immensely due to globalization is the exact kind of misleading analysis I expected from EPI.

How about a simple exercise of CEO compensation per employee? As in take the CEO's TC and divide it among the total number of employees. I bet you that number has gone down, not up.

This is EPI, manipulating data to generate public outrage is all they do.

German and Japanese CEOs make similar amount of cash salary and bonuses as Americans, they just don't benefit from the American bull stock market that causes equity based compensation to balloon.

https://www.wtwco.com/en-US/Insights/2020/12/ceo-pay-landscape-in-japan-the-us-and-europe-2020-analysis

Also, they receive a lot of perks to make up for it.

> 350 largest publicly owned U.S. firms

Also significant... Lots of CEOs make very modest amounts -- they're just not CEO of the 350 largest publicly owned US firms.

So you're saying executives decide what raises executives should get, and executives decide what raises typical workers should get, and they unaccountably decide to give all the money to the executives? Go figure.

It’s OK because I was a teacher for 17 years and never got a raise.

You’d still get base pay, just not bonuses. And if nobody gets bonuses when the company is failing then you can’t just jump ship to somewhere else, you actually need to be competent at your job and turn it around.

Nobody is going to try and rescue a sinking ship for base pay.

Turnaround specialists get paid the big bux for a reason.

You're right. Even when I was countering, I was thinking it. A CEO's direction impacts the behavior of tens of thousands of employees. Even if those behaviors only average earning the company an extra $10/mo per individual employee, that's already millions a year.

It's worth noting that the CEO's value is also embedded in the structure of the company. The hierarchy guarantees by definition that the CEO can have the biggest impact. If a company were more horizontal in its leadership and direction, then there would be less of a discrepancy in the amount of money different employees can earn the company with their ideas.

They will if they think they can turn it around and get the big bonus options. You’re looking at a single company in a vacuum. If the same rules apply to everyone your options are be a CEO of a sinking ship, or don’t work. And if no established CEOs want to do it, someone new will jump in.

>They will if they think they can turn it around and get the big bonus options.

That's if they succeed, many companies are doomed to fail regardless of the best efforts of the leadership.

>You’re looking at a single company in a vacuum. If the same rules apply to everyone your options are be a CEO of a sinking ship, or don’t work. And if no established CEOs want to do it, someone new will jump in.

No, you'll just get all the shitty CEOs in the dying companies which will go into bankruptcy, afterwards someone competent may come sniffing around post chapter 11.

Yeah but is it 99% RSU’s and 1% cash, the other way around or something else? There’s a huge difference. No ordinary worker one wants to get paid in RSU’s vesting in 3 years. Can’t buy groceries with that.

Why? CEO’s like all public company officers are appointed by it’s board of directors.

If the CEO doesn’t perform they are replaced.

The CEO’s decisions have a much greater impact on the company’s success than a low level employee. Thus, the CEO is often compensated according to the impact they make. This compensation can take the form of stock(RSU’s), bonuses, and salary.

If the company is doomed to fail regardless of leadership, then it should fail the quality of the CEO is irrelevant.

If only shitty CEOs are going to run the bad companies, where do the good CEOs go once there are no longer good companies with CEO slots open? Either they’ll have to swallow their egos and take a lesser position or they’ll have to try to right a sinking ship in the hopes of a future payday.

Unless your saying there are more good companies than there are good CEOs, but that just means right now there are shitty CEOs getting massive compensation packages because their company is successful in spite of the CEO.

The only way to get a companies as a whole to raise the pay of their works to something commensurate with the work being done by their employees is to tie the wages of the companies leadership to the workers wages and their bonuses to the companies success.

We already have CEOs today making thousands of times the average workers pay running a company into the ground while getting huge bonuses because the stock is going up then getting massive golden parachutes when they leave. That needs to stop, and the only way to do that is to legislate it.

I’m not saying that the CEO should get a pittance. Something in the 500-1000% the average wage should be plenty, and if you have a sliding scale for bonuses where the more workers your company has the higher percentage of the gross profits you’re allowed to receive as bonus, CEOs of top-tier companies will still be able to get massive paydays. There will always be people willing to take the job, and if it weeds out some shitty CEOs that are only doing it for the money, so be it. Those guys probably shouldn’t be CEOs anyway.

…percentages can go above 100%. CEO should be in the 500-1000% range of the average employee salary.

>If the company is doomed to fail regardless of leadership, then it should fail the quality of the CEO is irrelevant.

But you won't know which companies are doomed to fail until you try, and without compensation they wont try.

>If only shitty CEOs are going to run the bad companies, where do the good CEOs go once there are no longer good companies with CEO slots open? Either they’ll have to swallow their egos and take a lesser position or they’ll have to try to right a sinking ship in the hopes of a future payday.

They work a lower level executive position. Much better than trying to rescue a sinking ship with an uncertain chance of success and minimal pay until you succeed.

>The only way to get a companies as a whole to raise the pay of their works to something commensurate with the work being done by their employees is to tie the wages of the companies leadership to the workers wages and their bonuses to the companies success.
>
>We already have CEOs today making thousands of times the average workers pay running a company into the ground while getting huge bonuses because the stock is going up then getting massive golden parachutes when they leave. That needs to stop, and the only way to do that is to legislate it.
>
>I’m not saying that the CEO should get a pittance. Something in the 500-1000% the average wage should be plenty, and if you have a sliding scale for bonuses where the more workers your company has the higher percentage of the gross profits you’re allowed to receive as bonus, CEOs of top-tier companies will still be able to get massive paydays. There will always be people willing to take the job, and if it weeds out some shitty CEOs that are only doing it for the money, so be it. Those guys probably shouldn’t be CEOs anyway.

Like which companies?

Also, tying to gross profit is another hammer solution that doesn't work for a lot of companies. Growth companies for example rarely bring much of a profit during their growth phase, and yet leadership is extremely crucial during this period.

I disagree. The larger the company, the larger the compensation that goes to management. CEO and other officer decision’s have a major impact on a company’s future success.

So they are compensated accordingly.

In our they gave out a special dividend worth over 25 million and then did another 20 million of stock buybacks while not giving any raises smh.

And then they wonder why there's no company loyalty anymore.

My favorite was when I used to work for a place that would consistently give everyone below the executive level a 1% raise, then jack up the cost employees had to pay to park at the office. Between that and health insurance increases, you were effectively taking a pay cut every year. And then they wondered why people didn't stick around.

If the kooky soap people have figured it out, I bet other companies can too.

> study harder to climb the corporate chain

Except corporations are making it increasingly more difficult to do that as they "flatten the org". Not saying that it's right or wrong to be reducing middle management but less middle management roles means less opportunities to move up. Which is how you end up with people feeling increasingly stuck in their careers and salary progression.

I am confused because you literally mentioned that companies should limit CEOs compensation based on the lowest paying wage. I am mentioning that would not have the intended effect of reducing compensation and potentially create incentive to reduce low wage employees by outsource when possible making what your are suggesting pointless.

You can't increase pay for low wage employees unless you increase the minimum wage. That is what increases pay to ensure a livable wage not trying some round about way to limit ceo compensation.

You would be surprised to know that not all companies have enough money to keep all their employees and us why we are seeing layoffs. The problem you don't seem to understand is liquidity.

Would you rather be paid 40k a year cash or 20k a year cash and 30k in stocks which can't be sold for 5 years and you must give 3 months notice before selling.

The stocks are not liquid and mass selling harms the value further diminishing the benefit. You think the employee will be happy getting only 20k in cash for their bills? Furthermore you will be diluting the stock on each dispersal which decreases value further.

CEOs already have lots of capital and prefer stocks to cash because it's taxed less. Plus already being rich means they can borrow against their assets to avoid most taxes.

Think about this. You have 100k in assets and just it as collateral to borrow 50k. Eventually you need to repay the loan when the term is over right? Sure but you can pay that loan by borrowing against the assets appreciation and the additional assets you acquired (stocks/property/etc). You can continue you this as you accumulate more wealth. Now 100k on assets likely won't take work, but when you are talking 100s of thousands then you can start to see why our tax system can be worked over so well.

Capital gains taxes only come into play when you sell an asset that has appreciated. Borrowing against that asset to make money does not invoke capital gains.

The other thing you need to keep in mind is that profit sharing can be great at company that is doing well but it's horrible when it's not. My company used to compensate everyone partially based on hitting numbers with a effective profit sharing. The problem was that company wasn't able to hit numbers for a few years which meant everyone were being underpaid vs the general market. Eventually they switched the system to have the expected bonus compensation added directly to lower level employees pay checks and only upper level people had their compensation split because lower level employees have no power in the company hitting numbers. This made all the lower level employees happy because it gave them a substantial pay increase vs having a roller coaster pay based on how the company did.

As an FYI, the company still gives performance bonuses for lower level employees. The difference is that higher level employees have their bonus more based on company performance instead of individual (it's a ratio that moves based on level of pay).

Total comp matters. More importantly is there also stats for ratio of ceo pay to worker?

That just makes Germany & Japan look worse because they have lower worker pay.

Holy shit. You spent too much time explaining to me what I already understand.

> CEOs already have lots of capital and prefer stocks to cash because it's taxed less. Plus already being rich means they can borrow against their assets to avoid most taxes.

That's the reason why CEOs are compensated with stocks. They already rich enough, so they can take more risk and get a better reward as result, which becomes a self sustaining feedback loop.