In a new report, the Economic Policy Institute found CEO compensation surged by almost 18 percent in 2017 compared to a .3 percent rise in workers’ wages.
When looking at compensation of CEOs, which includes stock options in addition to salary, bonuses, restricted stock grants and long-term incentive payouts, the average CEO of the 350 largest firms received $18.9 million last year.
“Higher CEO pay does not reflect correspondingly higher output or better firm performance,” according to the report. “CEOs are getting more because of their power to set pay, not because they are more productive or have special talents or more education.”
CEO compensation grew by 1,070 percent between 1978 and 2017, outstripping the 637 percent growth in the stock market over the same period. “Both measures of compensation are substantially greater than the painfully slow 11.2 percent growth in the typical worker’s compensation over the same period,” EPI said in its report.
The CEO-to-worker compensation ratio, according to the study, was 312-to-1 in 2017, compared to a 20-to-1 ratio in 1965.
Characterizing the drastic disparities in compensation as the result of policy choices, EPI recommends policy alternatives, including higher tax rates on those with top incomes, higher corporate tax rates for firms with highest ratios of CEO-to-worker compensation, caps on CEO compensation, and increased shareholder engagement and monitoring with respect to CEO pay.
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