Feb 27, 2020 - Economy
CEO salaries are growing at an unprecedented pace
Add Axios as your preferred source to
see more of our stories on Google.
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.
