[system2]

Why would anyone care about how much CEOs make? It is private industry, if the board or owner wants to pay, CEOs get paid. It is not like they are stealing tax payer's money to pay these people. When the CEOs expire, they are also replaced. It is called business.

[smt88]

People care because overpaid CEOs destroy value for shareholders and, in theory, may be taking money that was rightfully earned by workers.

People care about a fair society, and rewarding poor performance (or over-rewarding mediocre performance) is obviously not fair.

Note also that many of these CEOs will fire subordinates for failure while they themselves are rewarded for it with golden parachutes.

[perfmode]

What’s behind the growing ceo to employee income ratio?

[T2_t2]

Just some causes that I think are mostly good:

1. Complexity - a change in exchange rates can hurt Netflix's / Google's / Apple's profit, even if all underlying numbers are correct. Guessing exchange rates is a terrifyingly difficult task, and it is just one of many complications 2019 CEOs have over 1969, let alone 1919.

2. Globalisation - rather ironically, if a company employs an extra 10% of people - no one loses their job they just add an extra 10% - the ratio likely gets larger. How is that a BAD thing that more people are employed? Mattel is the most telling in this context ($6,271 average worker salary). IMHO it's a GOOD thing that Mattel directly employs workers, rather than using a, say, Foxconn. But it makes the ratio a lot worse. Obfuscating real worker wages is bad for workers, but good for avoiding ending up on these sorts of reports.

3. Market size - a follow on from 2, if Google makes 50% of it's revenue outside of the USA, what should the ratio relate to? US workers to CEO? Or South African? A lot of these CEOs are multi-country CEOs, and that is a level of difficulty beyond what existed a quarter century ago.

4. Market forces - a law to make CEO pay public means it is signaling something negative when a CEO makes a low ratio, which drives it up. Having public records of salary makes negotiating easier for workers, and CEOs are no different, so it has had a double upwards pressure.

Just some things that have made it grow over time.

[Mirioron]

These kinds of articles like to play tricks to paint a narrative. Take this paragraph for example:

>Yet overall CEO pay continues to increase. According to Institutional Shareholder Services (ISS) the average pay for a CEO in the S&P 500 grew from $11.5 million in 2013 to $13.6 million in 2017.

Notice how it says "overall CEO pay" but then goes on to cite statistics for the average CEO of an S&P 500 company? It's a very common tactic whenever CEO compensation is discussed.

CEO pay is increasing for these companies though and one reason for it is that these companies are becoming bigger and bigger. This means that a CEO is responsible for more people and companies want more qualified candidates for that. Meanwhile the median employee usually doesn't have additional responsibility compared to the past.

Let's look at Walmart and a corner store. The clerk working at Walmart and the clerk working at a corner store roughly have the same responsibilities. On the other hand, the CEO of the corner store is responsible for 5 employees, but the CEO of Walmart is responsible for 2 million employees and this responsibility is growing.

Edit: I'm not saying that this explains the entire difference, but it's definitely one part of it.

[Scriptor]

Shareholders care what the company they have invested in spends its money on.

[c3534l]

Because America is very unequal and CEO pay is both high historically and high relative to countries like Japan. Excessive CEO pay is neither socially desirable or inevitable.

[TylerE]

Actually, aren't they literally stealing tax payer money? Inflated salary = lower profits = less net income = less tax?

[tertius]

The CEO is paying higher taxes than the corporation. (You limited it to salary.)

So in your example no, more taxes actually.

[TylerE]

Wouldn't that depend on the actual compensation? If it's mostly stock there are all kinds of capital gain games that can be played, no?

[tertius]

Yes, long term capital gains tax is lower than corporate tax. But you limited it to salary not compensation.

When we talk about compensation we need to start talking about things like golden handcuffs or parachute. Things linked to performance etc.

But corporate taxes also need to be kept in context. If I'm not "allowed" to pay my CEO a lot (which means he/she may leave) then I'll spend the money otherwise to reinvest etc. (A la Amazon). Is that "wrong" as well?

[scarejunba]

They're not private. They're public companies and we care because we're shareholders.

[system2]

Public doesn't mean they don't own the company.

[scarejunba]

Sure, but it often also means we (the shareholders) get a voice and so "Why would anyone care about how much CEOs make?" Is "because we are partly the owners and we care about what we own"