Feb 27, 2020 - Economy
CEO salaries are growing at an unprecedented pace
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CEO pay is growing at breakneck speeds even for top executives who aren't doing a very good job. In response to this trend of overvalued execs, social responsibility nonprofit As You Sow released its latest report on the most overpaid CEOs of S&P 500 companies.
What it means: The list is a calculation based on the chief executive's pay package, total shareholder return of the company during the previous year, and the pay relative to their company's average worker.
- The rankings are decided by a statistical regression model from HIP Investor, which computes what the pay of each CEO would be if it was determined by cumulative total shareholder return (40%), data that ranks companies by what percent of shares were voted against the CEO pay package (40%), and CEO to worker pay ratio (20%).
The big picture: CEO pay has increased so greatly that even the bottom 10% of companies with the worst one-year shareholder returns had CEOs with median pay packages of $12.6 million, As You Sow found.
- Between 1978 and 2018, inflation-adjusted CEO compensation based on realized stock options has increased 940%, according to data from the Economic Policy Institute.
- The increase was 25% to 33% greater than the companies' stock market growth and almost 10 times greater than the 11.9% growth in a typical worker’s annual pay during that period.
