Chart: 'CEOs make 312 times more than typical workers'

Aarthi Swaminathan
Finance Writer

The top executives of the biggest companies in the U.S. make about 312 times more than their workers, according to a new report by the Economic Policy Institute (EPI).

That estimate is up from 270 times in 2016.

Looking at CEO compensation across 350 publicly held companies, co-authors Larry Mishel and Jessica Schneider found that the average CEO in 2017 received $18.9 million in compensation. 

“The ratio reflects the different worlds of CEOs and their workers,” Mishel told Yahoo Finance. “Profits rose a ton, but CEO compensation rose a lot more.”  

Source: EPI

CEO compensation increased by 1,070%

The study done by the left-leaning think tank used two different measures to calculate compensation. First, the researchers looked at stock options (in addition to salary, bonuses, restricted stock grants, and long-term incentive payouts). Second, they also looked at the value of stock options at the time they are granted (to tease out fluctuations in the stock market).

Source: EPI. Average CEO compensation reached a peak in 2000 at the height of the late 1990s stock bubble where business leaders made nearly 344 times more than the typical worker.

Mishel pointed out that inequality has been growing since the late 70s and that since 1978, there has been a 1,070% increase in CEO compensation based on options realized. Meanwhile, hourly compensation for a worker only rose 11.2%.

Consequently, the gulf between workers and CEOs has grown exponentially. According to the report, back in 1965, a CEO only made 15 times more than his employee.

Workers have little leverage

“It’s hard to believe that CEO compensation is being set by the market for talent,” said Mishel.

He added that two problems have emerged from which could continue to exacerbate the inequality: the growing lack of corporate governance and the unwillingness of boards to reduce CEO pay, as well as the little leverage that workers have to shape their own future.  

The top 1% in the U.S. take home 21% of all the country’s income, according another report by EPI.

In Connecticut and New York, the average income of the top 1% was 48 times more than everyone else — largely due to the salaries doled out by Wall Street and the financial sector.

Interestingly, while there aren’t many of them around, female CEOs actually make more than their male counterparts, according to the AP. PepsiCo CEO Indra Nooyi, who has just stepped down, earned the most last year receiving $25.9 million in compensation.

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