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June 23 — CEOs at the 350 highest-revenue public U.S. firms on average were compensated $16.3 million last year, 303.4 times more than the typical worker, according to a June 22 nonpartisan think tank report.
The Economic Policy Institute report found that the sampled chief executive officers' compensation rose 3.4 percent last year and is up 54.3 percent since 2009.
In addition to looking at the CEO-to-worker compensation ratio, the paper also concluded that CEO compensation has risen dramatically compared to the other top 0.1 percent income earners.
“CEO compensation in 2013 (the latest year for data on top wage earners) was 5.84 times greater than wages of the top 0.1 percent of wage earners, a ratio 2.66 points higher than the 3.18 ratio that prevailed over the 1947–1979 period,” the report states.
The study measured compensation by using the “options realized” compensation series, which includes salary, bonus, restricted stock grants, options exercised and long-term incentive payouts, comparing that to the annual compensation of the workers in the key industry of the sampled firms.
EPI is a nonprofit, nonpartisan think tank created in 1986.
According to the report, the rapid growth in CEO compensation at the largest U.S. companies does not result from a need for competitive skills.
The reports' co-authors, Lawrence Mishel and Alyssa Davis, argue instead “that high CEO pay reflects rents, concessions CEOs can draw from the economy not by virtue of their contribution to economic output but by virtue of their position.”
They suggest that policy options for curbing excessive CEO pay include implementing taxes and greater use of say-on-pay votes.
CEO-to-worker pay ratios have been the subject of much recent debate, with even Hillary Clinton weighing in recently—telling an April gathering in Iowa that CEOs are paid “300 times” more than the American worker.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission must require companies to disclose pay ratios comparing the CEO's pay to that of typical workers. The SEC reportedly is planning to vote as soon as Aug. 5 on the long-delayed rule.
Corporate representatives have urged the commission to limit the disclosures to full-time U.S. employees and to consolidated subsidiaries, to allow the disclosures to be furnished rather than filed, and to allow longer periods for the ratios to be calculated and for transition to the new requirements.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
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