CEOs at top companies earned 380 times the average worker's income in 2011

[ProSense]

CEOs at top companies earned 380 times the average worker's income in 2011

by Laura Clawson



The AFL-CIO has released its CEO Paywatch with 2011 data. So how do CEOs stack up against ordinary workers? Well, the average CEO of a company on the S&P 500 Index earned 380 times the average American worker's wage, with average CEO pay having increased 13.9 percent in 2011.

The highest-paid CEO in the country was Apple's Timothy Cook, whose total compensation was nearly $378 million. That's more than 11,000 times the average worker's income of $34,053. The 100th highest-paid CEO, Heinz's W.R. Johnson, had total compensation of more than $18 million, 543 times the average worker's income.

What we can't know is how much CEOs make compared with the workers in their own companies; however, that's something the Dodd-Frank Wall Street reform bill will soon require companies to disclose. And it turns out it might well be good for companies if transparency pushed them to bring CEO pay a little more in line with average worker pay:

High CEO-to-worker pay ratios can reduce the performance of companies. Academic research has found that steep pay disparities hurt employee morale and productivity. Extreme disparities between CEO and employee pay also have been shown to result in a significant deterioration in the quality of products produced.

In companies where CEO compensation is disproportionately high compared with that of other employees, CEO-to-worker pay disparities can cause high employee turnover and lower job satisfaction. Another study found that firms with high levels of CEO pay relative to other top executives also reduce performance.

- more -

http://www.dailykos.com/story/2012/04/19/1084681/-CEOs-at-top-companies-earned-380-times-the-average-worker-s-income-in-2011

[twitcher]

1. not exactly

I agree with the basic concept here - the discrepancy in pay between workers and top executives is out of control.
I just wish people had their facts straight before publishing. It kind of undermines your argument when you play loose with facts. Cook was offered a stock incentive that required him to stay with Apple for 10 years to collect, so the $378 million they speak of is 10-year compensation collectible after 10 years (he made $900,000 the previous year). So to compare this to a workers annual income is ludicrous (but 10X more dramatic). Yet the fact remains that this is a serious problem that is getting worse.

[link:http://tech.fortune.cnn.com/2012/04/08/apple-ceos-earnings-the-new-york-times-gets-it-wrong/|

[ProSense]

3. No, it's exactly.

"so the $378 million they speak of is 10-year compensation collectible after 10 years"

I mean, is $37.8 million on average supposed to negate the point?

From the link you posted:

In fact, when you spread $376.2 million (the value of those 1 million RSUs the day they were granted) over 10 years, you get $103,000 a day. That's a ton of money, but it's not the $1 million dollars a day (or "$42,000 an hour. Or $700 a minute. Or $12 a second&quot , as the Times put it.

Of course, those 1 million shares are worth a good deal more now -- $633.68 million, to be precise, as of last week's close. But given that Cook was running Apple when the value of its stock took off, you could argue that when he collects his reward -- should he live that long -- he will have earned it.

[twitcher]

4. define exactly

If you're off by a factor of 10 (the Times), I wouldn't call it exactly. And I think we're both on the same side of this issue.
My concern is the point is too important to be devalued by faulty data. The point is completely valid at 37.8 million, but if your opponent can simply retort that you're using inflated numbers to make your argument, you've tainted the whole argument. I feel like the facts are our friends - we have a solid case without any any exaggeration or hyperbole.

It is likely the stock will be worth even more when he is able to collect, but no guarantee.

[Initech]

2. So when does the revolution start again?