Chart of the day

Posted: 14 May 2015 in Uncategorized
Tags: , , , , , ,

IN-Russell IN-S&P

According to the AFL-CIO Corporate Pay Watch, in the state of Indiana, the 2014 CEO to average worker’s pay ratio was 101:1 (for corporations in the Russell 3000) and 306:1 (for corporations in the S&P 500).

In the nation as a whole, the ratio (for corporations in the S&P 500) was 373:1, which surpassed the ratio for 2013 (331:1)—both of which were much, much higher than the ratio in 1980 (42:1).

The average CEO compensation of Russell 3000 companies in 2014 was $5,504,432. As it turns out, the industry with the highest CEO pay was Tobacco Products ($13,061,671), followed by Railroad Transportation ($12,526,083), Petroleum Refining ($12,502,981), Communications ($10,769,054), and Hotels ($10,058,029).

As for the Security and Commodity Brokers, Dealers, Exchanges, and Services industry (where financial institutions like Goldman Sachs are located), the average CEO pay was “only” $8,102,970—ranging from $105,295 (for Joe Mansueto of Morningstar) to $88,518,411 (for Mario J. Gabelli of Gamco Investors, Inc.).

Clearly, a large portion of the surplus workers create ends up in the pockets (and portfolios) of the CEOs of the nation’s largest corporations.

  1. cardiffkook says:

    “The surplus workers create.”

    Consumer surplus is created by the cooperative productive activities of entrepreneurs, capitalists (those providing capital), management, suppliers and workers. Workers don’t create it. The cooperative entity creates it. It’s a team thing.

    The returns going to capital, workers, management and such are set by supply and demand. In a world where close to a billion workers enter the global market, wages are being held down in part due to extreme increases in global supply. On the other hand, CEO salaries are being bid up, as are returns to capital.

    Honestly, nobody knows what the optimal salary and bonus package is for the average US Fortune 500 CEO or whether it is better if it goes up or down. The people, whose job it is to set it — the board — probably have the best idea, and sure enough they are the ones accountable for the decision. I will add that if paying more for the CEO has any measurable gains in profit, then the higher salary easily pays for itself. The average CEO makes decisions on a daily basis which dwarfs their salary. My guess is we are seeing a superstar bidding war for top executives, similar to what we are seeing in sports and entertainment.

  2. […] I’m not prepared to celebrate Price as a “good capitalist,” as against all the “bad capitalists” who are choosing to increase the gap between average workers’ pay and the enormous payments to CEOs. […]

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