It’s good to be the boss. An Equilar study of the top-100 largest companies – as determined by revenue – found that CEO pay hit a new high in 2017, with median compensation of $15.7 million.
According to The Washington Post, this record high was “not surprising given that the majority of CEO pay is made up of stock grants and 2017 was a banner year for market performance: The S&P 500 index saw a nearly 20 percent climb.” CEO median pay in 2016 came in at a paltry $15 million.
As quoted in the Post, Dan Marcec, Equilar’s director of content and communications, said that the growth is consistent with a bull market. “The higher stock prices are on the whole, the higher CEO compensation is going to be,” he said. (The first quarter of this year has seen significantly more market volatility, which is likely to impact CEO in 2018.)
Record high CEO pay was “not surprising given that the majority of CEO pay is made up of stock grants, and 2017 was a banner year for market performance.” (To compare, CEO median pay in 2016 came in at a paltry $15 million.)
CEO-to-Worker Pay Ratio
Equilar also included information on the CEO-to-worker pay ratio for each company, information that is now publicly available due to the U.S. Securities and Exchange Commission’s Dodd-Frank Act, that went into effect January 1 of 2017. The median CEO pay ratio for the 100 companies Equilar included in their report was 235-to-1.
As explained in PayScale’s report, CEO Pay: How Much Do CEOs Make Compared to Their Employees?:
“It wasn’t always this way. In 1965, the CEO-to-worker compensation ratio in the United States stood at about 20-to-1, according to a 2015 report by the EPI. But starting in the 1970s up through 2014, ‘inflation-adjusted CEO compensation increased 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s annual compensation over the same period.’”
Excessive CEO pay has been criticized as one of the causes of rising income inequality, a driving influence behind the introduction of the Dodd-Frank Act.
But according to PayScale’s research, among employees who know what their company CEO’s are paid, only 21 percent considered that pay excessive.
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