CEOs in the New Gilded Age

One of the major concerns in today's New Gilded Age of inequality is disparity in compensation across income levels. According to The Corporate Library, a corporate governance research firm, the CEO of a Standard & Poor's 500 Company made, on average, $14.2 million in total compensation in 2007. Meanwhile, the real median household income hovered around $50,000.

This is some major food for thought. The issue here isn't whether or not everyone should be making $14.2 million (though that'd be nice), or even whether every CEO should be making $50k. The question is one of fairness: the average CEO of an S&P 500 company makes 280 times as much as the median U.S. household. Do they work 280 times harder? Do they bring 280 times more value to society? These are the type of questions that we face in an era where the top one percent of earners have almost doubled their share of the total wages and salaries in the U.S.--just since 1979.

Graef Crystal, an expert on executive compensation and a columnist with Bloomberg news, spoke at our June conference, "Billionaires and Their Impact," about the ratio of CEO compensation to average income--and about how that ratio changes as you focus on different size corporations. A video clip of Crystal's comments is accessible below.

Comments

[J.D. Muir]

The solution is not capping executive incomes; the solution is to apply an "excess compensation" tax on excessive salaries (like the excess profits tax people wanted for the oil companies in 2008). Compensation exceeding 200 times a corporation's lowest wage should be taxed at 60%. In the alternative, compensation exceeding 600 times the federal minimum wage should be non-deductible by the employer.