CEO Pay Hikes Make Stock Market Gains Look Small


The term “income inequality” has become a widely-known phrase in a relatively short amount of time, driven by the widening wage differential between the corporate elites and those who work for them.

Despite the growing attention given to the issue, however, little has been done by elected officials to curb it. The U.S. minimum wage remains stagnant at $7.25 an hour. And new statistics show the breath of the problem has been years in the making.

CEO compensation grew more than 940 percent between 1978 and 2015. That’s a lot, no doubt.  To put it in full context, that growth rate even dwarfs income increases by both the top 0.1 percent and the stock market during the same period. The nation’s richest saw salaries grow by about 320 percent during those years, while the stock market increased by about 540 percent.

“The fact that CEO compensation grew so much faster than the pay of other very highly-paid earners, and far faster than stock prices, indicates that unique dynamics are at play and that corporate governance is not adequately restraining executive pay,” the Economic Policy Institute wrote.

The fight against excessive CEO pay is one the Teamsters know well. For years, the union has talked about the outrageous $187 million severance package McKesson CEO John Hammergren is entitled to if he is ever dismissed. But now that the company is looking to curb costs, it has stated if will shed 1,600 rank-and-file company employees instead.

As Teamsters General Secretary-Treasurer Ken Hall told Bloomberg, “The staggering ratio is yet further evidence that McKesson is being run first and foremost for Hammergren, with shareholders, employees and customers left far behind.” The union has filed a shareholder proposal asking the board to restrict the vesting of executives’ unearned equity compensation if the company is bought.

Lawmakers need to step up and demand that everyday Americans get paid a fair wage for a day’s work. But the private sector needs to take a closer look at its business practices. Corporate America is suffering from a self-inflicted black eye.