Corporate pay for the nation’s top big business bosses has been out of control for a while now. And a new report from the Economic Policy Institute (EPI) shows it didn’t take a break during the coronavirus either – it actually got worse.
While millions were jobless due to the pandemic-driven recession in 2020, CEO compensation at the top 350 U.S. firms grew 18.9 percent to $24.2 million on average, according to a new EPI analysis. As a result, the CEO-to-worker compensation ratio rose to 351-to-1, up from 307-to-1 in 2019 and 21-to-1 in 1965.
The authors—EPI Distinguished Fellow Lawrence Mishel and research assistant Jori Kandra—reveal how CEO pay cuts announced during the pandemic, as corporations laid off millions of workers, were largely symbolic. CEOs saw increased pay largely from vesting stock awards and cashing out stock options at a time of high stock prices.
“The escalation of top CEO compensation further exacerbates the inequalities that have grown for four decades and been amplified in the pandemic. CEOs offering pay cuts during the pandemic yielded favorable headlines, but were symbolic at best and a head fake at worst,” Mishel said. “Rising pay for CEOs and other executives is income that would otherwise have gone to others—what these executives earned was not available for broader-based wage growth for typical workers.”
Since 1978, CEO compensation has skyrocketed 1,322.2 percent, growing roughly 60 percent faster than stock market growth during this period and far exceeding the modest 18 percent compensation growth for the typical worker. The message is clear – in good times or bad, CEOs are coming out on top.
When companies struggle, workers bear the brunt – not so for all too many bosses who chase short-term unsustainable goals, inspired by exorbitant sums of cash, equity and perks. The lack of investment going back into companies for employees, research and development, destruction of morale and motivation for front-line workers and a dangerous always escalating expectation of compensation at the top. Long-term shareholders such as pension funds suffer as companies can’t sustain growth, creating more risk and uncertainty for working families.
The Teamsters have a long history in fighting against exorbitant CEO pay not only before Congress, but to shareholders themselves at companies such as XPO Logistics and McKesson. But it really comes down to the need for a change of culture at the corporate level. Companies cannot continue to shun their workers in favor of their fat cats at the top.
Workers deserve to be rewarded!