It pays to be the top dog.
Pay for chief executive officers rose by just over 11% from 2020 to 2021, according to a new report by the left-leaning Economic Policy Institute.
Compared with the typical worker’s pay, CEOs were paid 399 times as much in 2021, the highest multiple on record, EPI said. In 1965, CEOs were paid 20 times what the average worker made.
On average, CEOs were paid $27.8 million in 2021, the institute said.
And CEO pay has risen by 1,460% since 1978. CEO compensation rose 36% faster than the stock market during this period, the EPI noted, and “far eclipsed the slow 18.1% growth in a typical worker’s annual compensation” over that span, in 2021 dollars.
“Exorbitant CEO pay is a contributor to rising inequality that we could restrain without doing any damage to the wider economy,” Josh Bivens, the director of research at EPI and one of the report’s authors, said in a statement.
“We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so,” he added.
CEO pay is changing
Dave Kamper, a senior state policy coordinator at EPI, wrote on Twitter
: “CEO pay has gone up 1,460% since 1978. In our last report released before COVID started, in 2019, it had *only* gone up 940%. That is to say, ONE THIRD of the TOTAL jump in CEO pay since 1978 has come in the past three years.”
The EPI estimated the average CEO compensation of the 350 largest publicly owned U.S. companies. It used data from the S&P Compustat ExecuComp database for the years 1992 to 2021, and survey data published by the Wall Street Journal for selected years dating back to 1965.
Compensation figures included salary, bonuses and long-term incentive payouts, including stock awards and stock options.
The EPI also noted a shift in how CEOs were being paid: CEO compensation in this roundup had shifted away from the use of stock options and toward the use of stock awards.
Excluding Elon Musk
The EPI flagged an “extreme outlier” in 2021 who was excluded from the analysis for how much their pay exceeded even the typical CEO’s: Elon Musk of electric-car maker Tesla Motors
The Tesla chief in 2021 exercised $23.5 billion in stock-option grants that would have expired in 2022, the EPI said. This made his pay nearly 1,000 times the average among CEOs of large companies.
Including his pay would’ve led to an increase in CEO pay of more than 300%, the think tank added.
Write to: [email protected]