In the 1970s ceos made 40x compared to the average salary. now they make over 400x compared to the average salary. Non CEO salaries have been stagnant. What caused such hyperinflation for CEOS and stagflation for non CEOS?
Increasing return on capital versus return on labor; The former's share has crossed over the later at some point after the industrial revolution and increasing since.
My thought is basically CEO salary is based on AUM, as companies merge, grow larger (factor in inflation, etc) the valuations are just higher than they were in the 70's, hence the pay comensurate with the size of the budget. We know a CEO is not 400x smarter or worth more than the 40x pay of the 70's. CEO's have managed to ratio the salary level with the budget. On a similiar scale should we pay a union worker in proportion to the retail price of the car he produces? In 1970 a new car may cost 3k but the same car today retails @ 30k. The union employee is just assembling a widget. The union employee is a donkey.
Greed? The better comparison would be with European CEOs. They are not earning 400X of the average salary (not even close), so why such a disparity between American and European firms???
Complicit board members. There is functionally ZERO corporate oversight. Asshole #1 is appointed by asshole #2 to board of XYZ and asshole #1 appoints asshole #2 to ABC's board. Wash, rinse, repeat.
Think I prefer to be in system where *I* actually have a chance of becoming that asshole than one where I don't.
He is correct ballpark in a way... 40 years back CEOs used to pull 500K... and lowest secretary /janitor pulled 10K -20.K comeon. some geezers who worked in the 60s. .throw us a bone here now. average CEO pay for fortune 100 company is 10-30- million.. and low paid. secretary. permanent emp. pulls 15/hour - 30 K ?? now ratio is . and i add JUST BALL PARK... lowest to CEO is. 1:100 =====================================. Mckesson CEO pulled in $131 million this year. http://www.forbes.com/sites/christopherhelman/2011/10/12/americas-25-highest-paid-ceos/
It's a scam. It's pure cronyism and not pay for performance. Whitacre earned something like $50MM one year at Ameritech when the stock fell 15% and was the worst performing baby bell that year. It's the rule and not the exception. So you want to lick some EVP's nut-sack and curry-favor that may some-day net you a huge and completely arbitrary 8-figure paycheck?