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Cha-ching! Chief executives in America’s largest companies are bringing home the bacon, and lots of it. A new report reveals top executives made an average of $15.5 million in compensation in 2015.
That’s a whopping 276 times the annual average pay of a typical American worker, says the Economic Policy Institute, the Washington, D.C.-based think tank that conducted the study. The disparity marks quite a change from 1965, when CEOs were paid about 20 times more than the average worker.
The EPI’s report is based on an analysis of several compensation factors tied to chief executives of the top 350 companies in the U.S. They include:
- Long-term incentive payouts
- Restricted stock grants
- The value of stock options exercised
Although the CEO-to-worker compensation ratio dipped last year from the level in 2014 — when there was a 302-to-1 ratio — the EPI report attributes that drop to a “faltering stock market, and a corresponding decline in the potential value of stock options — not any structural changes in corporate governance or how CEO compensation is set.”
EPI President Lawrence Mishel, who co-authored the CEO pay report, says in a statement:
“The stock price of any given company is largely a reflection of the stock market overall, not its CEO’s performance. We see that in the way that average CEO pay tracked the stock market in 2015. CEO compensation will likely resume its upward trajectory when the stock market moves up again.”
After crunching the inflation-adjusted pay totals for chief executive pay from 1978 to 2015, the EPI says top-dog compensation has shot up a jaw-dropping 940.9 percent since 1978.
To put that dramatic increase in perspective, it was 73 percent faster than the stock market’s growth during the same period. Meanwhile, the typical American worker’s annual compensation from 1978 to 2015 rose just 10.3 percent, EPI noted.
“CEO pay has grown far faster than the pay of typical workers, college graduates, or even the top 0.1 percent,” says report co-author Jessica Schieder in a statement. “Skyrocketing CEO pay isn’t about the market for talent — it’s about what executives can get away with.”
Of course, not all chief executives in America are earning six figures or more. These CEOs earned $1 last year.
For more on top-dog pay, check out the “Companies With Big Gaps Between CEO and Worker Pay.”
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