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CEOs: 347 to 1

Skyrocketing+pay+compensation+has+been+awarded+to+CEOs+for+many+years.+The+numbers+continue+to+grow+while+average+workers+see+little+changes+to+their+earnings.
Skyrocketing pay compensation has been awarded to CEOs for many years. The numbers continue to grow while average workers see little changes to their earnings.

Skyrocketing pay compensation has been awarded to CEOs for many years. The numbers continue to grow while average workers see little changes to their earnings.

Photo by: wikimedia.com

Photo by: wikimedia.com

Skyrocketing pay compensation has been awarded to CEOs for many years. The numbers continue to grow while average workers see little changes to their earnings.

Izzy Morgan, Staff Reporter

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Over the years, there has been an increasingly large gap between the pay of CEOs and the typical employees with titles lower than CEO. In 2016,  CEOs of Standard & Poor’s (S&P) 500 companies received on average 13.1 million dollars in total compensation. In contrast, typical everyday workers make on average 37,632 dollars. This makes the ratio between CEO pay and your typical worker 347 to 1.  

   So what causes this large margin between the two? Companies say that they have to pay big in order to attract the candidate who will make the greatest impact on their company. Board influence is also key. The pay of public company CEOs is normally set by a board committee. The members of these committees are appointed most of the time by the CEO. Because they are hired by the CEO, they tend to pay CEOs a lot of money because the CEO appointed them into a leadership position. These members also can be fired by the CEO as well. Along with boards determining pay, some companies have turned to peer groups. Peer groups are supposed to be looking at other companies within the same market, to compare and set CEO pay. However, many look to larger companies who pay their CEOs much more.   

 Not all margins are this big. The pay ratio of CEO vs. employee of the company Facebook, is 4 to 1. CEO Mark Zuckerberg makes 610,455 dollars a year. Urban Outfitters is also in the same boat, with a ratio of 3 to 1. CEO Richard Hayne makes 68,487 dollars a year. Among some of the worst are Chipotle and CVS Health, with ratios of 1,522 to 1 and 1,192 to 1.

 The pay of CEOs varies from country to country. Levels of development are key in CEO pay. More developed countries pay their CEOs higher because theoretically, workers lower in the hierarchy make more as well. Societal standards also play a role in CEO pay. Societies that are susceptible to corrupt and unjust governments learn to accept hierarchical ruling. This leads to people in power, making more money while average employees are making lower wages.

 When presented with these facts, junior Robin Petersen said, “ I am appalled by how much more CEOs make than normal workers. I knew that they made a large amount of money, but I had no idea that the ratio was 347 to 1.”  

 CEO pay is up 997 percent since 1978 and continues to grow rapidly to this day. It is a trend that many do not agree with; however, it is a big part of the business world.   

 

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CEOs: 347 to 1