CEO compensation gets plenty media attention, yet seems impossible to resolve, according to a column in the Seattle Times.
Columnist Jon Talton says that even though growth in median CEO compensation has slowed, the disparity between CEO pay and employees whose wages have leveled off for a very long time remains staggering.
- In 2015, Talton notes, the average CEO at an S&P 500 company received 335 times more than the average non-supervisory worker, according to the AFL-CIO's Executive Paywatch.
Talton blamed the growing disparity on "flawed corporate governance," often because boards were star-struck by flashy chief executives. Talton also blames those same C-Suite denizens for doing whatever it took to keep labor costs down - such as "busting unions, engaging in job-killing mergers and sending work overseas" in an effort to boost the stock price and serve up short-term gains.
He cites reforms such as shareholder "say-on-pay" votes (non-binding) and Dodd-Frank's mandate on the CEO-to-worker compensation ratio disclosure to at least have caused companies to move some of executive compensation to more of a performance-based outcome.
Talton offers a few remedies for getting the CEO to worker ratio back to rational level, including raising taxes on high earners to pre-1981 levels (70% vs. today's 39.6%), or wipe out the corporate tax-option loophole, which gives companies a way to deduct executive pay stock options. One group estimates the cost of that loophole to be $64.6 billion since 2010.