August 16, 2018

The Era of CEO Super-Pay Appears to Be on Hiatus

EPI has an interesting piece today about the growth of CEO pay. It’s the usual story: depending on how you measure it, CEO pay used to be about 20x worker pay, while today it’s 200-300x higher. But I was more curious about something else. CEO pay in recent decades has been tied to stock grants as a way of “paying for performance.” So how does CEO pay compare to the stock market?

Since I’m lazy I just averaged EPI’s two measurements to produce a single trendline. Here it is:

In theory, CEO pay ought to follow the stock market under a pay-for-performance scheme. But no. Even compared to the S&P, CEO pay skyrocketed from 2x to 10x between 1965 and 2000.

But then a funny thing happened: nothing. CEO pay flattened out at 10x and actually went down to about 7x after the Great Recession. By most measurements, CEO pay has stagnated relative to the stock market since 2010.

The same is true of workers, so where is all the money going? The answer, apparently, is that stockholders got tired of giving their profits away to both workers and executives. So they’re keeping it for themselves, as we see in reports of corporate earnings, dividend payouts, and stock buybacks. For now, anyway, the era of the superstar—and super compensated—CEO appears to be over.

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In "News Never Pays," our fearless CEO, Monika Bauerlein, connects the dots on several concerning media trends that, taken together, expose the fallacy behind the tragic state of journalism right now: That the marketplace will take care of providing the free and independent press citizens in a democracy need, and the Next New Thing to invest millions in will fix the problem. Bottom line: Journalism that serves the people needs the support of the people. That's the Next New Thing.

And it's what MoJo and our community of readers have been doing for 47 years now.

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In "This Is Not a Crisis. It's The New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, why this moment is particularly urgent, and how we can best communicate that without screaming OMG PLEASE HELP over and over. We also touch on our history and how our nonprofit model makes Mother Jones different than most of the news out there: Letting us go deep, focus on underreported beats, and bring unique perspectives to the day's news.

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