It’s Wealthy at the Top

It makes sense that a CEO is generally the highest paid employee of any company, but the growing discrepancy between CEO and average worker compensation does not. In 1965, the chiefs of America’s largest 350 companies by revenue made 21 times the average compensation of their industries’ workers. In 2020, the CEO-to-worker compensation ratio shot to 351:1, up 1,670% since 1965.

Calculating CEO pay is complicated by the role of stock-based compensation. Defenders of high pay claim that stock-heavy compensation renders high pay the result of high performance. But does it? Why should a sustained bull market lead to massive pay increases for the CEO (and not the workers)? Because in the church of shareholder value, a rising stock price is the one true god.

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CEO-to-Worker Compensation Ratio

Top 350 American companies by revenue

Source: Economic Policy Institute.