(By Lydia DePillis)
The ratio of CEO pay to an average worker’s salary is on the rise again. (Economic Policy Institute)
Want to know exactly how much richer the average chief executive is than you and me? Take a look at the Economic Policy Institute’s latest white paper, which tracks the growth of CEO compensation over the last half century. Here are the major takeaways:
Average pay for the CEOs of the top 350 firms, including the stock options they exercised, was $14.1 million in 2012–up 37.4 percent from 2009.
That’s a bit higher than it would be if you just measured stock options granted. “Firms apparently pared back the value of new options granted because CEOs fared so well by cashing in options as stock prices grew,” the report’s authors write.
The ratio of CEO pay to average worker pay is 273-1, down from a high of 383-1 in 2000, but up from 20-1 in 1965.
CEO pay has increased faster than wages to high-skilled workers, suggesting that the salary market isn’t very efficient. “Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on output or employment,” the report concludes.
CEO pay is now also closely tracking the S&P 500 index, which didn’t used to be the case.