While Worker Wages Stayed Flat This Past Year, You Won’t Believe What Happened to CEO Pay

The top ten highest paid chief executives in the country all took home more than $100 million last year, with two of them earning billion-dollar paychecks.

“I have never seen anything like that,” said Greg Ruel, who authored a report on executive compensation released Tuesday by GMI Ratings. “Usually we have a few CEOs at the $100 million-plus level but never the entire top ten.”

Facebook’s Mark Zuckerberg took home more than $2.2 billion, and Richard D. Kinder of Kinder Morgan, Inc. took home more than $1.1 billion.

The case of Kinder is deceptive. In 2012, his base salary was $1, but he made a billion dollars selling restricted stock. That followed a nearly $60 million profit from stock in 2011.

GMI’s poll of 2,259 American companies — accounting for salary, stock options, bonuses, and the like — found an average increase in executive compensation of 8.47 percent. For the top 1,000 companies, however, that number jumps to 15.47 percent.

Meanwhile, median household income has remained flat at $51,017. Adjusted for inflation, there was almost no measurable increase between 2011 and 2012.

Worker wages haven’t only remained flat over the same period, they have “fallen about 9 percent from an inflation-adjusted peak of $56,080 in 1999,” writes The Guardian’s Dominic Rushe.

So why are CEOs getting rewarded? Stock option packages are supposed to “align the interests of senior executives with shareholders,” writes GMI, but “the unintended consequences of these grants is often windfall profits that come from small share price increases.”

In other words, these huge stock options are supposed to give CEOs the incentive to make sure their company does well, but mostly it incentivizes them to seek small, sometimes short-term stock jumps. Put another way, it’s not in the immediate self-interest of these immensely powerful people that the economy as a whole does well, or even that their own companies do well in the long run.

There are efforts to make sure, at the very least, that these compensation systems are transparent. The SEC is considering a rule that would require companies to disclose the ratio of CEO compensation and the pay of the typical worker. In 2012, CEOs of major corporations took home an average of 354 times more than the average worker (up from 42 times in 1982, 201 in 1992 and 281 in 2002) but that’s just from data that’s available.

Tell the SEC companies must disclose CEO-to-worker pay ratios.

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