CEOs are one of the highest paid people in the world, and the job comes with a multitude of responsibilities warranting its hefty price tag. But unlike most workers who earn almost all their money through consistent salaries, a CEOs base salary is only a small fraction of their wealth with most of their compensation coming from performance-related bonuses and stock options that allow executives to buy company shares. But could the gap between CEO and worker compensation be getting too big? Well over the course of the pandemic the poor have gotten poorer, and the rich have gotten richer, a trend that already existed beforehand but has been further exacerbated.
Since the pandemic began, the average S&P 500 CEO’s compensation grew over $700,000 to reach $15.5 million. When compared to workers’ pay through the lens of a ratio, that 15.5 million dollars is about the same as 264 employees combining their salaries. Since last year that number went up to about 299 – highlighting the true scale of the wage gap. Some have connected the CEO wage issue into the overall wealth-inequality in the US with the richest 1% of Americans owning around 16 times more wealth than the bottom 50%, according to Federal Reserve data for the first quarter of 2021. Some companies, however, have made some efforts to compensate employees better. For example, this year Walmart announced they would raise wages for about 425,000 hourly employees in the United States. What do you think about the salary difference? And is it necessary to continue economic growth?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.