It pays to run a big company. Even in 1965, CEOs of the largest U.S. firms were pulling in an average of $902,000 a year (in 2017 dollars) and, since then, their compensation has skyrocketed.
According to a new report from the left-leaning Economic Policy Institute (EPI), CEO pay peaked in 2000 at $21 million a year (in 2017 dollars). In 2017, CEOs in America's largest firms made an average of $18.9 million in compensation, or 312 times the annual average pay of the typical worker. That's "5.5 times as much as the average earner in the top 0.1 percent," the report notes.
The EPI looked at the 350 largest U.S. firms and measured compensation both with stock options realized and with the value of stock options granted. The options-realized measure "reflects the value of options exercised that CEOs report on their Form W-2 wages and is what they actually earned in a given year," the EPI explains. The second measure "includes the value of the stock options granted in the relevant year and is not influenced by CEOs' decisions to cash or not cash in their options during that year."
Both measures also include salary, bonuses, restricted stock grants and long-term incentive payouts.
"Regardless of how it is measured, CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay," reports the EPI.
Just how fast has pay grown for those at the very top? Here's the average annual CEO compensation for various years starting in 1965. CEO pay is represented in 2017 dollars.
1965
CEO annual compensation based on options realized: $902,000
CEO annual compensation based on options granted: $688,000
1973
CEO annual compensation based on options realized: $1.18 million
CEO annual compensation based on options granted: $898,000
1989
CEO annual compensation based on options realized: $3 million
CEO annual compensation based on options granted: $2.29 million
1995
CEO annual compensation based on options realized: $5.83 million
CEO annual compensation based on options granted: $6.47 million
2000
CEO annual compensation based on options realized: $21.05 million
CEO annual compensation based on options granted: $21.14 million
2009
CEO annual compensation based on options realized: $10.98 million
CEO annual compensation based on options granted: $10.55 million
2014
CEO annual compensation based on options realized: $16.84 million
CEO annual compensation based on options granted: $12.69 million
2017
CEO annual compensation based on options realized: $18.86 million
CEO annual compensation based on options granted: $13.26 million