531:1
From CEOs Are Overpaid:
According to Business Week, the average CEO of a major corporation made 42 times the average hourly worker’s pay in 1980. By 1990 that had almost doubled to 85 times. In 2000, the average CEO salary reached an unbelievable 531 times that of the average hourly worker.
…and from Executive Paywatch:
In 2003, the average CEO of a major company received $9.2 million in total compensation, according to The New York Times.
$9,200,000 a year…on average. The number is so big that it just becomes to hard to grasp, so how about this to simplify it. Assuming that CEOs work about 60 hours per week, that comes out to $2,948.72/hour. That is equivalent to the monthly salary of somebody making $35, 000/year.
I understand and appreciate that these CEOs have worked hard to get where they are, and have probably made great sacrifices to do so, but how much is too much?
By the way, these salaries are subsidized by the taxpayers. Take a look at this (slightly dated) quote from Dollars & Sense:
Most corporate leaders would say any government regulation of CEO pay is an outrageous interference in the free market. But the government is already involved in CEO pay — through the U.S. tax code. The tax code allows businesses to deduct “a reasonable allowance for salaries or other compensation.” The catch is that the code doesn’t define “reasonable.” So companies can — and do — routinely deduct the entirety of grotesque executive pay packages. Corporations pay less in taxes than they should, and regular taxpayers pick up the slack.
Kinda makes you proud to be an American…
August 2nd, 2004 at 2:17 pm
{I felt like playing devil’s advocate on this!}
Hmmm. That’s rather overstated.
First, they don’t say how many ‘major companies’ that is averaged over. 100? 500? I could certainly imagine that. Also, if you look at PayWatch, the top grossing guy has a total compensation package of 327M!! That kinda sways the entire average, eh?
Second, a large portion of that is ‘on paper’ — in fact, two thirds is options or restricted stock or other longer-term payouts. Granted, that still means on average the ‘major companies’ are giving out average cash compensation of salary and bonus of 3M, but… Those companies being the ‘major’ companies (not just nationally, but in many cases internationally), I guess I don’t see that as being outrageous.
Ah well, an interesting read this late at night. I guess at the end of the day, don’t invest your retirement in stocks, certainly not in your corporate stock.