CEO pay spiked to $18.9 million in 2017 if you include realized stock options, according to a new Economic Policy Institute report looking at average CEO pay for the 350 largest firms. That’s a 17.6 percent increase over 2016, and a 1,070 percent increase since 1978—a time period during which average worker pay rose just 11.2 percent. Another measure, counting stock options granted rather than stock options realized, found that CEO pay rose from $13 million to $13.3 million.
The answer to the standard defense of high CEO pay is no, they’re not worth it. While CEO pay grew 1,070 percent by the first measure and 979 percent by the second between 1978 and 2017, the stock market grew by 637 percent. Even the top 0.1 percent of earners saw an increase of “only” 308 percent during that time. Not to mention that “Higher CEO pay does not reflect correspondingly higher output or better firm performance. Exorbitant CEO pay therefore means that the fruits of economic growth are not going to ordinary workers.”
So CEOs have seen their pay rise and rise past any reasonable evaluation of their worth even by the stated standards of capitalism … yet we kept being told they’re worth it. Meanwhile, average workers fall further and further behind.
The EPI report has a few common-sense suggestions for fixing this: a higher marginal income tax rate for people making this much money, taxing corporations more if their CEO-to-worker pay ratio is especially high, taxing compensation over a set cap, and allowing shareholders a greater say on CEO pay. Any of that, though, will require major political change to achieve—voters might want to see solutions, but the Republicans who control Congress would never allow it (and too many Democrats would drag their feet, for that matter).
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