The Era of CEO Super-Pay Appears to Be on Hiatus

EPI has an interesting piece today about the growth of CEO pay. It’s the usual story: depending on how you measure it, CEO pay used to be about 20x worker pay, while today it’s 200-300x higher. But I was more curious about something else. CEO pay in recent decades has been tied to stock grants as a way of “paying for performance.” So how does CEO pay compare to the stock market?

Since I’m lazy I just averaged EPI’s two measurements to produce a single trendline. Here it is:

In theory, CEO pay ought to follow the stock market under a pay-for-performance scheme. But no. Even compared to the S&P, CEO pay skyrocketed from 2x to 10x between 1965 and 2000.

But then a funny thing happened: nothing. CEO pay flattened out at 10x and actually went down to about 7x after the Great Recession. By most measurements, CEO pay has stagnated relative to the stock market since 2010.

The same is true of workers, so where is all the money going? The answer, apparently, is that stockholders got tired of giving their profits away to both workers and executives. So they’re keeping it for themselves, as we see in reports of corporate earnings, dividend payouts, and stock buybacks. For now, anyway, the era of the superstar—and super compensated—CEO appears to be over.

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate