And while on topic of generosity, CEOs are getting even bigger pay cheques according to a new report by the US-based Economic Policy Institute (http://www.epi.org/). But ah, there’s another trend accompanying this totally unsurprising revelation: CEO pay is rising even relative to compensation for the top 0.1 percent of America’s earners.
Apparently CEO pay was roughly three times as high as that of the top 0.1 percent of earners overall throughout the 1980s and early 1990s. The ratio spiked in the dotcom years as CEO pay rose even faster than the stock market. Post-bubble CEO pay seems to have settled into a “new normal” of 4.5 to 5 times that of top earners. Put another way, CEO compensation has risen even faster than other “superstar” earners – a group composed mostly of lawyers, doctors, financiers, and other c-level executives.
The report suggests that the large discrepancy between what CEOs get paid and “other very high wage earners also casts doubt on the claim that CEOs are being paid these extraordinary amounts because of their special skills”. As Harvard Business Review blogger Walter Frick explains: “That may be. The data does suggest that rising CEO pay can’t simply be explained by the broader increase in returns to higher skilled labour.”
Read more: http://blogs.hbr.org/2014