“The exponential growth in executive compensation over the last thirty years, as compared to slow growth in average worker pay, has been at the center of debates about the financial crisis and its aftermath.”
The Harvard Business Review blog has this excellent analysis by Ben Heineman on extreme compensation growth for CEOs in companies and the societal implications.
The analysis refers to a recent UK report from the High Pay Commission quoting some very remarkable figures:
- “UK executive salaries have risen by up to 5,000 per cent since 1980, compared with 300 per cent increase for the average worker.
- The pay for CEOs is many multiples of the companies’ average pay today — e.g. 63 times at BP and 74 times at Barclays (four or five times greater than 30 years ago). The multiple for U.S. CEOs may be as much as 300 times the average pay today. Moreover, increases in pay for the FTSE 350 occurred at a much faster rate than increases in company profits or share price.
- Income inequality is increasing. In 2007, the top one percent of the UK population took home 14.5 percent of the national income compared to 5.93 per cent in 1979. (In the U.S., the top 1 per cent received a remarkable 23.4 per cent of national income in 2007.) “