Quick Hit Ellyn Fortino Friday July 22nd, 2016, 9:35am

Top CEOs Made Less In 2015, But They Still Earned 276 Times More Than Average Worker

CEOs at America's largest firms received an average of $15.5 million in compensation last year, meaning they earned 276 times more than the typical worker in 2015, new research shows.

The $15.5 million in average CEO compensation was down about 5 percent from 2014, when the figure was $16.3 million, and up 46.5 percent since the economic recovery began in 2009, according to the Economic Policy Institute (EPI).

"Most (83 percent) of the decline in CEO pay from 2014 to 2015 can be explained by the drop in the value of realized stock options in that period," EPI's report reads. "Therefore the decline in compensation does not reflect any structural change in how CEO compensation is set or changes in corporate governance. CEO compensation will likely resume its upward trajectory when the stock market resumes upward movement."

For its report, the left-leaning think tank calculated CEO compensation by analyzing salaries, bonuses, restricted stock grants, options exercised and long-term incentive payouts for chief executives at the top 350 U.S. firms.

Last year, top CEOs made 276 times more than the typical worker, down from the 2014 CEO-to-worker compensation ratio of 302-to-1 and the peak ratio of 376-to-1 in 2000.

Nonetheless, the pay gap between CEOs and average workers remains much larger today than it was in the 1960s, 1970s, 1980s and 1990s, according to EPI. In 1965, for example, CEOs earned 20 times more than the average worker's salary.

The report adds that inflation-adjusted compensation among America's top CEOs "increased 940.9 percent" from 1978 to 2015. That increase is "75 percent greater than stock market growth and substantially greater than the painfully slow 10.3 percent growth in a typical worker's annual compensation over the same period."

Jessica Schieder is an EPI research assistant and the report's co-author.

"CEO pay has grown far faster than the pay of typical workers, college graduates, or even the top 0.1 percent," she said in a statement. "Skyrocketing CEO pay isn't about the market for talent -- it's about what executives can get away with."

The report includes several recommendations for "curtailing escalating executive pay and broadening wage growth."

Among them are "implementing higher marginal income tax rates at the very top" and eliminating the so-called performance pay loophole that lets corporations deduct unlimited amounts from their federal income taxes for costs associated with performance-based executive pay.

"If CEOs earned less or were taxed more, there would be no adverse impact on output or employment," the researchers conclude.

Comments

Log in or register to post comments