Skip to main content

Ratio of CEO pay compared with average worker pay.
Ratio of CEO pay compared with average worker pay.
On Sunday, The New York Times published its 2013 compensation survey of CEOs at the 100 largest publicly traded American companies. No real surprises there, both in terms of the names, in the number of women, in the number of people of color and in the obscene amounts being paid. The Times survey, conducted by Equilar, found that total compensation had risen by nine percent since 2012, to a median of $14 million. The Wall Street Journal called this increase "moderate." Good data to know for tens of millions of American workers the next time they ask for a moderate raise.

The AFL-CIO did its own survey of CEO compensation at 350 companies on the Standard & Poor's 500 Index. It found that in 2013 "the CEO to worker pay ratio was 331:1 and the CEO to minimum wage worker pay ratio was 774:1." On average, the CEOs of these companies received $11.7 million in total compensation:

Today’s ratio of CEO-to-worker pay is simply unconscionable. While CEO pay remains in the stratosphere, production and nonsupervisory workers took home only $35,239 on average in 2013, and a full-time worker making the federal minimum wage earned only $15,080.

Even as companies argue that they can’t afford to raise wages, the nation’s largest companies are earning higher profits per employee than they did five years ago. In 2013, the S&P 500 Index companies earned $41,249 in profits per employee, a 38% increase.

Congress passed a law in 1993 that was supposed to keep executive pay in check by limiting the corporate tax deduction for compensation paid to the CEO and the next four highest-paid executive officers to $1 million per person. But that exempted performance-based pay. And those who calculate executive compensation have driven a $$$-laden truck through that loophole ever since. Most executive pay isn't in cash, but in equity and options. In the technology sector, for instance, equity and options make up 90 percent of compensation, but the average across all economic sectors hovers between 60 and 70 percent. Options are being used less these days than stock awards.
CEO pay compared with minimum wage
There's more analysis below the fold.

Complaints about the compensation levels aren't a matter of envy. The gap between workers—especially the lowest paid workers—and the top executives is contributing to a pernicious impact on our society. Peter Eavis writes:

Economists have long known that high executive pay has contributed to the widening gap between the very rich and everyone else. But the role of executive compensation may be far larger than previously realized.

In “Capital in the 21st Century,” (Belknap Press), a new best seller that is the talk of economics circles, Thomas Piketty of the Paris School of Economics makes a staggering observation. His numbers show that two-thirds of the increase in American income inequality over the last four decades can be attributed to a steep rise in wages among the highest earners in society. This, of course, means people like the C.E.O.s in the Equilar survey, but also includes a broader class of highly paid executives. Mr. Piketty calls them “supermanagers” earning “supersalaries.”  

“The system is pretty much out of control in many ways,” he said in an interview.

That's certainly one way to look at it. But one could also say it's well under control of the people who benefit the most from the system, one in which they scoop up millions of dollars annually while millions of adults are paid a statutory minimum wage whose buying power is far less than it was two and three decades ago. It would take five years' worth of nine percent raises to bring the current national minimum wage into sync with the buying power it had in 1968. And it still would not be a living wage.

This system doesn't just given ample rewards to the top few and screw those on the bottom. It screws middle-class taxpayers as well. Susan Holmberg points out:

All this and Americans get the bill. Beyond the innumerable costs we’ve borne from the recent economic crisis, the Economic Policy Institute calculated that taxpayers have subsidized $30 billion to corporations for the performance pay loophole between 2007 and 2010. According to a recent Public Citizen report, the top 20 highest-paid CEOs received salaries totaling $28 million, but had deductible performance-based compensation totaling over $738 million. Assuming a 35 percent tax rate, that’s a $235 million unpaid tax bill. The Institute for Policy Studies calculated that during the past two years, the CEOs of the top six publicly held fast food chains “pocketed more than $183 million in performance pay, lowering their companies’ IRS bills by an estimated $64 million.”
Some people like to tell us that this is the natural order.

 

Originally posted to Meteor Blades on Wed Apr 16, 2014 at 10:05 AM PDT.

Also republished by Daily Kos.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Nothing short of disgusting. (15+ / 0-)

    Tell Warner Brothers Pictures that Rooney Mara is #NotYourTigerLily.

    by ExpatGirl on Wed Apr 16, 2014 at 10:14:05 AM PDT

  •  And Around 5,000 Times the Low End Workers (9+ / 0-)

    of 50 years ago, who are no longer in the US but generally offshore.

    Come to think of it, many of those are mid level workers too.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Apr 16, 2014 at 10:44:31 AM PDT

    •  split the right with anti-offshoring legislation (1+ / 0-)
      Recommended by:
      llywrch

      The rich love cheap labor whether it comes here or whether the factory gets shipped over there.

      The Republican base does not love cheap labor one bit.  We may not like their reasons (i.e. racism), but we can sure use their votes, especially if we take a page from Lee Atwater and focus on the economic argument against cheap labor.

      The working poor of either party doesn't love cheap labor either, since they're the ones who actually have to compete with the Asian sweatshop slaves and the day laborers from behind Home Depot.

      Domestic politics is the continuation of civil war by other means.

      by Visceral on Wed Apr 16, 2014 at 03:04:33 PM PDT

      [ Parent ]

  •  Can we flush the idea of meritocracy yet? (10+ / 0-)

    Probably should have done that after their reckless criminal behavior tanked the global economy and they came running to us with their hand out so they could escape the consequences via us handing them lots and lots more money on top of the subsidies their friends at the Chamber already get.

    Sure once I was young and impulsive, I wore every conceivable pin. Even went to socialist meetings, learned all the old union hymns. Ah, but I've grown older and wiser. And that's why I'm turning you in. http://www.youtube.com/watch?v=u52Oz-54VYw

    by SouthernLiberalinMD on Wed Apr 16, 2014 at 11:06:49 AM PDT

    •  Nope. The concept of "meritocracy" is (1+ / 0-)
      Recommended by:
      alice kleeman

      embedded in American culture.  This millstone will never be lifted from our necks until many more Americans from all walks of life (not just progressives, the poor, the formerly middle class, etc.)  are literally in the streets over this.

      •  We had a running start at it with the Occupiers, (2+ / 0-)

        but the media succumbed to their own corporatism.  The middle class, all 27 of them, need to realize that tolerating all the resources moving in one direction makes it impossible for them to fulfill their own dreams of making it big one day.  Most of the consumers of goods and services are on this side of the drift and will not be able to pay anything to aspirants because, well, the means are long gone.  There is no true economy without the middle class.

        Building a better America with activism, cooperation, ingenuity and snacks.

        by judyms9 on Wed Apr 16, 2014 at 03:32:22 PM PDT

        [ Parent ]

      •  Not sure. The more people think that (1+ / 0-)
        Recommended by:
        jbsoul

        "the system is rigged," "the deck is stacked," etc., the less people believe in a meritocracy.

        Wall St did serious damage to that with the bailout.

        Sure once I was young and impulsive, I wore every conceivable pin. Even went to socialist meetings, learned all the old union hymns. Ah, but I've grown older and wiser. And that's why I'm turning you in. http://www.youtube.com/watch?v=u52Oz-54VYw

        by SouthernLiberalinMD on Wed Apr 16, 2014 at 03:53:49 PM PDT

        [ Parent ]

  •  Given an approximate 2080 hour work year (10+ / 0-)

    (52 weeks x 40 hours), the CEO has earned an entire yearly average worker salary by 3:30 p.m. on January 2, his first day.  He (seldom she) has earned the minimum wage salary by about 11 a.m. on January 2.

    I must add: this assumes that the CEO takes New Year's Day off and begins his week on the 2nd.  Of course, the minimum wage worker probably works on New Year's Day, as this is typical in retail, fast food, hospitality, health care and other low-wage sectors.

    •  Well, I think the average CEO.... (1+ / 0-)
      Recommended by:
      VClib

      does work a little more than a 40 hour week. The ones I know work more like 70 - 90 hours a week. So for your purposes, maybe we should say that they earn parity about  January 4th or so. That's still 3 days faster than what it took God to create the universe!!!

  •  We should ask those who tell us that this is (3+ / 0-)
    Recommended by:
    BlueDragon, Eric Nelson, gregsullmich

    in the natural order, where in nature there such inequalities to be seen. The naturla animal world seem to share the planet quite nicely without destroying their next fellow critter.

  •  does this quote (3+ / 0-)
    Recommended by:
    Eric Nelson, YucatanMan, chuckvw
    The Institute for Policy Studies calculated that during the past two years, the CEOs of the top six publicly held fast food chains “pocketed more than $183 million in performance pay, lowering their companies’ IRS bills by an estimated $64 million.”
    Supply one justification used at board meetings?  Pay CEO's more or give it to the government in taxes???
  •  Corporate tax rates should be 100% tied to (4+ / 0-)
    Recommended by:
    Eric Nelson, a2nite, YucatanMan, chuckvw

    the ratio of CEO total compensation to that of its lowest paid full time employee AND as well rolls in a calculation to include workers who are part time. This should include the incomes of all outsourced contractors as well. It really is not that tough to build an equation for this.

    Do this and we will no longer be subsidizing WalMart to the tune of $600k per store/year. Do this and all the sudden companies will discover they can afford to increase wages. Do this and the economy will fire up.

    I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires. - Susan B. Anthony

    by pajoly on Wed Apr 16, 2014 at 02:24:08 PM PDT

    •  pajoy - Warren Buffett earns $100,000/yr (0+ / 0-)

      and has for 25 years. Would that allow Berkshire Hathaway to pay little or no US federal income tax? Corporate taxes need to be made less complex, not more.

      "let's talk about that"

      by VClib on Thu Apr 17, 2014 at 07:52:50 AM PDT

      [ Parent ]

  •  It won't be long before some troubled, unemployed (3+ / 0-)
    Recommended by:
    a2nite, chuckvw, alice kleeman

    vet with PTSD -- or even just some guy whose life has fallen apart after years being unemployed -- starts hunting CEOs.

    These amoral greedy people are sowing some serious hatred. It ain't about resentment; it is about basic morality.

    I distrust those people who know so well what God wants them to do, because I notice it always coincides with their own desires. - Susan B. Anthony

    by pajoly on Wed Apr 16, 2014 at 02:28:07 PM PDT

  •  Structural inequality: a mathematically provable.. (5+ / 0-)

    ..fact. Or maybe I should have called it structured inequality, because this is purposeful and completely the antithesis of what all these "conservative's" who tout the blessings of a "free market".

    It's complete Bullshit. Not only are these rich f**ks NOT worth 774 times what a minimum wage worker is paid, they have to rig the "market" in order to survive at all, as they have no demonstrable real life skills at actually producing anything of value.

    The Institute for Policy Studies calculated that during the past two years, the CEOs of the top six publicly held fast food chains “pocketed more than $183 million in performance pay, lowering their companies’ IRS bills by an estimated $64 million.”

    Congress is long overdue to close the performance pay loophole. The Supreme Court just made that harder. Thanks to Citizens United and now the McCutcheon decision, the same CEOs who are benefitting from the loophole are much freer to draw upon the corporate coffers to donate big money to politicians to maintain these loopholes.

    Performance pay? What bullshit that is!

    So ithis is a start:

    Nevertheless, there is potential for getting it done. Senators Blumenthal (CT) and Reed (RI) have introduced the Stop Subsidizing Multi-Million Dollar Corporate Bonuses Act (S. 1476), which would finally end taxpayers’ subsidies to CEOs by closing the performance pay loophole and capping the tax deductibility of executive pay at $1 million. In the House, Rep. Lloyd Doggett (D-Texas) has introduced a companion bill, HR 3970.

    There are many policy ideas for how to curb skyrocketing CEO pay. Piketty and his colleague Emmanuel Saez argue for a much higher income tax rate for top incomes. (The growth rate of CEO pay was at its lowest when the U.S. had confiscatory tax rates for the very rich.) In the current political climate, a more viable step toward slowing the growth of CEO pay and the damage it does to our economy is to, at long last, close the performance pay loophole. It should never have been there in the first place

    Only, forget the cap at one million. Let's aim for zero and raise the capital gains tax to twice that of the highest earned income tax rate (workers rate) for those earning a one $ million dollar salary and incrementally up the rates above one $ million  in new brackets from there on up

     - end of rant

    Thx MB

    •  like idea of shifting focus to capital gains tax (1+ / 0-)
      Recommended by:
      Mr MadAsHell

      Everyone pays the earned income tax, but most Americans don't pay the capital gains tax ... and most of the ones that do still need to work pay their bills.

      Nobody can argue we'd be taxing anything other than free money for kicking back and owning stuff.

      Domestic politics is the continuation of civil war by other means.

      by Visceral on Wed Apr 16, 2014 at 02:58:22 PM PDT

      [ Parent ]

      •  Every country in the G20 has a lower tax rate (0+ / 0-)

        for long term capital gains than earned income. If the US was the only company in the developed world with a higher capital gains tax rate, than earned income rate,  it would likely lead to capital flight and a lower rate of economic growth.

        The US has always had a lower long term capital gains rate than for earned income, except for the three years after the Tax Reform Act of 1986 when both capital gains and earned income were capped at 28%. For many decades the long term capital gains tax was one half a taxpayers top marginal rate.

        "let's talk about that"

        by VClib on Thu Apr 17, 2014 at 07:58:26 AM PDT

        [ Parent ]

        •  so the rich are holding us hostage there, too? (0+ / 0-)

          We have to give them special treatment or they'll run away and we'll become like Africa?

          We have to work harder than they do and then we have to pay more of what little we make while they make millions in their sleep off of owning stuff and then they get to pay a lower rate on it because they're just so damn special?!

          There's no reason to invest anywhere except for favorable tax laws?

          Domestic politics is the continuation of civil war by other means.

          by Visceral on Thu Apr 17, 2014 at 09:16:16 AM PDT

          [ Parent ]

  •  Socialist Obama is to blame. (0+ / 0-)

    Right!!!

    "Onward through the fog!" - Oat Willie

    by rocksout on Wed Apr 16, 2014 at 02:38:24 PM PDT

  •  just close the "performance-based pay" loophole (0+ / 0-)

    Logically all pay is performance-based pay - I don't know anyone who gets paid to sit on their ass - so there's no need to define it and single it out for different treatment.

    An alternative would be to cap CEO salaries at some low multiple of the lowest paid employee/contractor: say 20 times like it was in the "good old days".  CEOs can then be paid whatever is necessary to retain their "talent" for golfing, doing lunch, and reading one page "executive summaries", while even part-timers can be assured of a living wage.  Alternately, if keeping payroll down is such a pressing concern, logically the CEO (who gets paid the most) would offer the most low-hanging fruit.

    Domestic politics is the continuation of civil war by other means.

    by Visceral on Wed Apr 16, 2014 at 02:53:37 PM PDT

    •  Visceral - to qualify as "Performance Pay" (0+ / 0-)

      for the purpose of the 162 m exception the compensation plan has to meet certain tests and periodically be approved by shareholders. Here is a good summary.

      http://www.foley.com/...

      "let's talk about that"

      by VClib on Thu Apr 17, 2014 at 08:08:31 AM PDT

      [ Parent ]

      •  obviously those policies aren't working (0+ / 0-)

        When directors are executives from other companies, it's worth it to them to keep the "industry average" of compensation as high as possible, as well as simply to cultivate a culture of "retaining top talent" no matter the cost.  If this were any other employee, it'd be company policy to pay them as little as necessary to retain them.  But only C-levels have "talent" apparently; they're snowflakes who can make or break companies just by showing up ... while the rest of the peons (with actual skills rather than an MBA from Harvard Schmoozing School) are just waiting for robotics and AI to catch up.  I think it's executives who are fungible and who like any other commodity should be paid compensation set by the lowest global level.  If they can hire the former CEO of friggin' Burberry to run Apple, then CEOs are definitely commodities.

        Also the idea that stock prices are an infallible indicator of the company's long-term growth potential is IMO erroneous.  Those vast piles of cash that corporations have been sitting on throughout the recession are being used to buy back stock in order to keep the price up, while everything else is being cut to the bone even as the stock market shoots back up.  In any event, shareholders and executives paid in stock options are on the same side as intended, but in any other context, that'd be called "conflict of interest".  

        Domestic politics is the continuation of civil war by other means.

        by Visceral on Thu Apr 17, 2014 at 09:35:40 AM PDT

        [ Parent ]

        •  There are numerous reasons for the explosion (0+ / 0-)

          in executive compensation and I have had a ringside seat for all of it. The initiation of 162m was one of the primary culprits. Some day I am going to write a diary on this topic, just so I can refer people to it, but other regulations, that too had unintended consequences, are also part of the history. I need to do more research so I can have a lot of links in my diary for people to read.

          "let's talk about that"

          by VClib on Thu Apr 17, 2014 at 09:47:19 AM PDT

          [ Parent ]

  •  Leeches. All of them. (4+ / 0-)

    I'm fed up with these takers. The bunch of them are nothing but insatiable vampires.

    And as the song and dance begins, the children play at home with needles, needles and pins.

    by The Lone Apple on Wed Apr 16, 2014 at 02:53:41 PM PDT

  •  Incorrect. The $1 mil cap was only on deductible (5+ / 0-)

    portion of exec pay.  Nothing in that tax law prevented a company paying > $1 mil, they just couldn't deduct the excess.
    http://www.law.cornell.edu/...

    (m) Certain excessive employee remuneration
    (1) In general
    In the case of any publicly held corporation, no deduction shall be allowed under this chapter for applicable employee remuneration with respect to any covered employee to the extent that the amount of such remuneration for the taxable year with respect to such employee exceeds $1,000,000.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Wed Apr 16, 2014 at 02:55:28 PM PDT

  •  So at Walmart (6+ / 0-)

    a minimum wage worker has to work over 8 months to earn what the CEO does in one hour—assuming that the minimum-wage Walmart employee is allowed to work full time, which is a big assumption.

    And of course, the Walmart CEO can enjoy such a cushy salary because American taxpayers subsidize Walmart's labor costs through food stamps, Medicaid, housing subsidies.

  •  Yeah but (3+ / 0-)
    Recommended by:
    Meteor Blades, Eric Nelson, jbsoul

    shipping US jobs offshore is hard work.


    It's just not fair. It's 98% of the Politicians that give the other 2% a bad name. (both parties)

    by CitizenOfEarth on Wed Apr 16, 2014 at 02:58:52 PM PDT

  •  To quote Ted Kennedy "When Does The Greed Stop"? (5+ / 0-)

    Answer; not until We, the People force governmental change by ousting the obstructors (GOP) and changing policies that affect corporate governance to DIS-incentivize runaway Executive Compensation.

    Check out at 5:01 in the linked video  


    Ted Kennedy on YouTube

    America's LAST HOPE: vote the GOP OUT in 2014 elections. MAKE them LOSE the House Majority and reduce their numbers in the Senate. Democrats move America forward - Republicans take us backward and are KILLING OUR NATION!

    by dagnome on Wed Apr 16, 2014 at 03:01:26 PM PDT

  •  And this is only "pay" (2+ / 0-)
    Recommended by:
    Eric Nelson, Yo Bubba

    It doesn't even touch non-compensatory sources of wealth available to the mega rich ( which includes the CEOs of major corporations). Some of the worst malefactors of great wealth aren't even on a payroll...

    It always seems impossible until its done. -Nelson Mandela

    by chuckvw on Wed Apr 16, 2014 at 03:05:57 PM PDT

  •  Makes old anti-Semitic Henry Ford look like a (0+ / 0-)

    saint, don't it?  Pay people enough to buy your company's products?  Not today.

    Armed! I feel like a savage! Barbarella

    by richardvjohnson on Wed Apr 16, 2014 at 03:52:44 PM PDT

  •  Full time minimum wage workers (0+ / 0-)

    did not earn "only $15,080" in 2013.  

    Not unless they worked 52 forty hour weeks, they didn't.  

    Likely closer to the $14.500 that 50 weeks of 40 paid hours would gross, if that--

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site