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, which is the highest multiple on record, EPI said. In 1965, CEOs was 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, director of research at EPI and one of the authors of the report, 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
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 their analysis for how much their pay exceeded even the typical CEOs: 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 over 300%, the think tank added.
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