Wage Gap Between C.E.O.s and Workers Continues to Grow
The New York Times reported yesterday on a new study, which revealed that the U.S.’s top 200 C.E.O.s made an average of $14.5 million in 2011 — an average pay raise of 5 percent. The study also found that, for the first time, more than one C.E.O. — two — had nine-figure paydays.
Meanwhile, the average worker in the United States saw a pay increase of only 2.8 percent. C.E.O. salary has increased 127 times faster over the last thirty years than worker salary. To put this in perspective, the average Fortune 500 chief executive is paid 380 times more than the average worker.
The Times reported that the Dodd-Frank legislation, which orders public companies to give shareholders a vote on compensation at least once every six years, may act only as a façade, as shareholders’ voices don’t have to be taken into consideration. For example, 73 percent of investors for Simon Property, which had the second-highest paid C.E.O., voted against his pay of $137 million — but that didn’t change a thing.
The Times wrote:
Investors get a vote on pay only after the numbers have been set by corporate boards. And, because the votes are nonbinding, they carry only the sting of possible embarrassment.
The Times also reported that experts say companies decide on high compensations for their C.E.O. as an incentive to keep good ones on board.
The Simon Property Group said the bonus offered to Mr. Simon “is intended to ensure that one of America’s best C.E.O.’s will lead the company until at least 2019, when Mr. Simon will be 58 years of age, rather than pursuing other employment opportunities.”