Dive Brief:
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CEO compensation gets plenty media attention, yet seems impossible to resolve, according to a column in the Seattle Times.
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Columnist Jon Talton says that even though growth in median CEO compensation has slowed, the disparity between CEO pay and employees whose wages have leveled off for a very long time remains staggering.
- In 2015, Talton notes, the average CEO at an S&P 500 company received 335 times more than the average non-supervisory worker, according to the AFL-CIO's Executive Paywatch.
Dive Insight:
Talton blamed the growing disparity on "flawed corporate governance," often because boards were star-struck by flashy chief executives. Talton also blames those same C-Suite denizens for doing whatever it took to keep labor costs down - such as "busting unions, engaging in job-killing mergers and sending work overseas" in an effort to boost the stock price and serve up short-term gains.
He cites reforms such as shareholder "say-on-pay" votes (non-binding) and Dodd-Frank's mandate on the CEO-to-worker compensation ratio disclosure to at least have caused companies to move some of executive compensation to more of a performance-based outcome.
Talton offers a few remedies for getting the CEO to worker ratio back to rational level, including raising taxes on high earners to pre-1981 levels (70% vs. today's 39.6%), or wipe out the corporate tax-option loophole, which gives companies a way to deduct executive pay stock options. One group estimates the cost of that loophole to be $64.6 billion since 2010.
