Trends in CEO Pay

CEO pay went up in 2011. Again.

The average CEO pay of companies in the S&P 500 Index rose to $12.94 million in 2011.[1]
Overall, the average level of CEO pay in the S&P 500 Index increased 13.9 percent in 2011, following a 22.8 percent increase in CEO pay in 2010.

2011 Average CEO Pay at S&P 500 Index Companies

Salary     $1,091,182
Bonus     $268,110
Stock Awards     $5,279,828
Option Awards     $2,352,544

Non-Equity Incentive Plan Compensation  $2,382,529
Pension and Deferred Compensation Earnings  $1,308,625
All Other Compensation  $252,657
TOTAL     $12,935,475

paywatch2012_skyrocket

The ratio of CEO-to-worker pay between CEOs of the S&P 500 Index companies and U.S. workers widened to 380 times in 2011 from 343 times in 2010.[2] Back in 1980, the average large company CEO only received 42 times the average worker's pay.[3]

CEOs supposedly deserve all this money for increasing shareholder value. However, while the average CEO pay increased 13.9 percent at S&P 500 Index companies in 2011, the S&P 500 Index ended the year at the same level as it started.

This double-digit increase in average CEO pay for the second consecutive year shows just how disconnected the top 1 percent is from the 99 percent. In 2011, average wages increased just 2.8 percent and average worker pay totaled $34,053.[4]

Both workers and shareholders have suffered over the previous decade. On Dec. 31, 2010, the S&P 500 Index closed 19 percent below its high on March 24, 2000. U.S. median household income fell $3,719 between 2000 and 2010.[5]

Runaway CEO pay is one reason why income inequality is growing in the United States. A Congressional Budget Office report found that inequality has risen dramatically, with the top 1 percent receiving most of the income growth between 1979 and 2007.[6]

What's more, a new study by economist Emmanuel Saez at the University of California shows that in 2010—the first year of the economy's recovery from the Great Recession—the top 1 percent captured 93 percent of the growth in income.[7]

[1] AFL-CIO analysis of 313 companies who disclosed CEO pay data as of April 1, 2012, as provided by Salary.com.

[2] AFL-CIO Executive Paywatch calculations.

[3] "CEOs: Why They're So Unloved," Businessweek, April 22, 2002.

[4] U.S. Bureau of Labor Statistics' Current Employment Statistics Survey—Table B-2: Average hours and earnings of production and non-supervisory employees on private nonfarm payrolls.

[5] U.S. Census Bureau, Selected Measures of Household Income Dispersion, Table IE-1.

[6] "Trends in the Distribution of Household Income," Congressional Budget Office, October 2011.

[7] "Striking it Richer: The Evolution of Top Incomes in the United States, (Updated with 2009 and 2010 Estimates)," Emmanuel Saez, University of California, Berkeley, Department of Economics, March 2, 2012