As predictable as hay fever, Spring heralds the annual New York Times assault on CEO pay, out this Friday ahead of the Memorial Day weekend.
This year’s edition has a grabby conceit: “Want to Make Money Like a C.E.O.? Work for 275 Years” as well as a nifty animation that’s worth checking out.
It’s a decent theme, but perhaps not as interesting as some other years. Last year, it was—natch— TrumpFear that drove the story. “Since taking office on Jan. 20, the businessman-turned-politician has met with hundreds of executives, including at least 41 of last year’s 200 best-paid C.E.O.s, a New York Times analysis shows.”
Back it 2015, there was hope. Comeuppance was in the air. “Top C.E.O. Pay Fell — Yes, Fell — in 2015” “All of which raises a tantalizing prospect: Has executive pay finally peaked? Have the C.E.O.s and the compensation committees that set their pay discovered something approaching modesty?”
You get the idea.
This is, of course, not to encourage weeping or the gnashing of teeth for the 200-best paid public company CEOs. They don’t need it. They know they’re going to take these hits — it’s part of the job. As The Times reminds, they’re well compensated (if the bulk of your pay is tied to the market, it will rise in a bull market as this 2006 paper points out) and the ones I’ve met are a pretty thick-skinned bunch.
The problem is that looking at CEO pay by looking through the lens of the top 200 best-paid CEOs tells you nothing about most CEO pay.
So, in an equally predictable spring ritual (which goes back at least as far as 2013) let’s remind everyone about the reality. There are nearly 6 million companies in the United States, and fewer than 4,000 of them are public companies. Chief Executive does the largest annual survey of private company comp in the U.S. and — surprise — the numbers are somewhat different than the ones in The Times. (For more information, go to www.ChiefExecutive.net/compreport).
Private Company Median CEO Comp (2016 actuals, the most recent data we have—we’re in the midst of our latest survey) was $361,558. At the same time, the Bureau of Labor Statistics pegs 2017 median earnings for all occupations at $50,620. That’s a CEO-to-worker pay ratio of 7.14. A gap, to be sure (yes, people who run companies make a lot more than most people who work at companies) but hardly the story-topping 4,987x at Mattel for former CEO Margaret Georgiadis, who left the company after vastly underperforming the market.
Median pay for the Top 200 on the Times list? $17.5 million—more than 48x the median pay for private CEOs in our survey.
One final, equally predictable note: In 2015, we did a deep dive on the numbers, below. We found the biggest determinants of pay were company size and public ownership. As you’d expect.
Happy spring. See you next year.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
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2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
