Yup. I work for a large Japanese company and this is true. Kinda proud of this fact, NGL! Sooooooo tired of the perpetuating myth of the CEO as God or “the smartest -that’s why he’s the CEO” BS. I think these myths are spun to justify this ever growing gap. Although this myth has been around for a long time, long before this gap got as crazy big has its gotten relative to average worker pay.

It’s the CEOs of the top 350 companies only, so basically CEOs of $100+ billion companies only. It’s not even the entire S&P500. Huge sample bias - obviously people running a $100 billion company are going to be high comped, and they are a highly highly successful group.

This data basically doesn’t apply to the standard small business or even a normal mid-to-large enterprise

I get it. but shareholders care about making the max amount of money and they don't give a shit if a CEO is rich or broke. The fact that the market has driven exec. wages up shows that there's a value add there. it's depressing and unethical, but the free market has demonstrated that it is a worthy expense if you want to remain competitive.

I think the conversation should start at legislation that regulates the free market so we don't do this to ourselves, not a question of whether or not they're worth paying that much. If they weren't worth it, nobody would pay them that much. that's it.

There is a fuck ton of sample bias here. Clearly the data was chosen to draw the desired conclusion.

First, they’re just picking the salaries of the 350 largest companies’ CEOs. So the CEO sample size is 350, which lacks statistical significance / rigor. Not only that, you’re picking probably 350 of the ~1,000 highest salaried most successful people in America. I don’t think that is a fair representation of overall CEO pay. It would be like looking at the salaries of NBA all-stars and claiming amateur basketball players are overpaid. There’s been a ton of corporate consolidation in the last 40 years, which means the largest 350 firms have gotten meaningfully larger. Also picking the top-350 means you’re only seeing CEOs who are tremendously successful, so likely to make more money on merit. Lastly a lot of CEO comp is options in company stock, which are worth more when the company performs well (as the top-350 would be expected to do) and benefit generally from mass stock market appreciation over the last 50 years.

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Again, if they are that valuable then why not just hire a great CEO and fire everyone else. If he is worth 400 regular workers then he should be able to manage just fine.

Sorry, I don't deny that good management is important but it simply is not that valuable that one person should be a multi million / billionaire while every one under them has to buy food stamps.

May I inquire as to what “Han Chinese” means?

Just under 54.5% as of Meta’s 2022 filing, which doesn’t include another 2.5% of proxy voting power.

this article gets posted like 8x a day.

companies have grown drastically since 1978. International commerce is huge

Fortunes largest company in 1978 was GM with 3.3billion in profit

today the largest company (by revenue) is walmart at 143billion in profit, apple was 170billion.

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The 350th largest company in 1978 was Tyco, with 8400 employees

today the 350th largest company is Air Products, with 19000 employees.

If you're a company that has multi-billion dollar profits, it makes sense to pay millions for a CEO who can improve profits by even just a percent compared to a cheaper one and this is the justification you'll often see used - as companies have gotten bigger, the potential value a CEO can bring increased and so their compensation does too.

Just one small problem - at the far end of the bell curve the differences in skill are lost entirely to statistical noise and what studies exist show that CEO pay depends primarily on factors outside their control - I.e. Luck.

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But make the comparison to Japanese or German CEOs compared to American CEOs and you start to see how much of outlier the americans are

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None of who you listed produce material goods that lives depends on. They’re individual entertainers, not corporations. I don’t think they’re in the same realm of, say, a pharma company selling drugs at a 600% markup.

I also think those rules should apply to union bosses(and anyone else who’s salary is paid by union dues) and members of Congress. They should get paid a fixed percentage of the average salary of those they represent plus a stipend for flights to and from DC when Congress is in session(one flight in, one flight out per session, but only if they actually fly to and from DC)

Yes, I agree.

A Times article defending "gazillion-dollar salaries": https://time.com/5566816/ceo-pay-income-inequality/

I didn’t read through everything but I’m surprised they didn’t mention the change in CEO pay law that was passed in 1993. The Clinton administration attempted to limit tax reductions for CEP pay to 1 million.

The law backfired and CEO pay increased much more dramatically than before the law passed. It was so filled with loopholes that companies could reduce their tax burden if they provided CEOs with stocks. For example one company went from 300K CEO pay to 7.74 million.

Here’s a good summary link

I agree! I'd like something like a top executive to lowest paid worker compensation ratio balance requirement.

Good question!

"We focus on the average compensation of CEOs at the 350 largest publicly owned U.S. firms (i.e., firms that sell stock on the open market) by revenue. Our source of data is the S&P Compustat ExecuComp database for the years 1992 to 2021 and survey data published by The Wall Street Journal for selected years back to 1965. We maintain the sample size of 350 firms each year when using the Compustat ExecuComp data"

Still… it’s January 23rd, I’ve been keeping what I thought was a tight hold on my finances and I’ve spent $140 on meals out. Which isn’t counting 3 meals that my mom treated me to 🙈.

So that’s pretty impressive.

Athletes, actors, musicians and artists all dwarf CEO pay. Funny how you conveniently left them off the list.

I'm struggling to understand this. Housing prices are going up? There's more demand for houses in Russia? Overall inflation seems completely unaffected by the war. Something feels off with the data.

I get the merit behind that, but if it were true, it would be an amazing financial hack that shareholders can use to cut expenses. Instead, it's an unbelievably competitive market to attract and hold executive talent, so it seems clear that the market supply and demand drives that salary growth.

Unionize. That’s how you get shit done. Weekends, 8-hour days, minimum wages, all of those were started by unions. I do really believe that’s how the world works, because that’s what I went to college and studied on for four years.

It’s unbelievably fucked, but that’s how capitalism works. Higher level executives make a much bigger impact, even though the frontline worker works harder and has a tougher job. But that doesn’t matter for wages. It’s not based on how hard you work, but instead your wages are based on money in compared to money out, and the supply/demand for the labor for your role.