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by Worldwatch Institute on August 27, 2003
In 2001, the average annual pay of U.S. CEOs topped $11 million—some 350 times as much as the U.S. factory worker, who earned on average $31,260.
Growing pay discrepancies in the United States emerge largely from a compensation system skewed in favor of the CEO, most notably the common practice of offering stock options (giving CEOs the right to buy company stock in the future at a price set today). This system has effectively put CEOs at odds with workers, and placed jobs in jeopardy because they have encouraged executives to take excessive risks that inflate stock values and to use accounting methods that overstate company earnings.
In 2001, the average annual pay of U.S. CEOs topped $11 million—some 350 times as much as the U.S. factory worker, who earned on average $31,260.
Growing pay discrepancies in the United States emerge largely from a compensation system skewed in favor of the CEO, most notably the common practice of offering stock options (giving CEOs the right to buy company stock in the future at a price set today). This system has effectively put CEOs at odds with workers, and placed jobs in jeopardy because they have encouraged executives to take excessive risks that inflate stock values and to use accounting methods that overstate company earnings.
Source:
Gap in CEO-Worker Pay Widens, Vital Signs 2003, pp. 90-91.
Worldwatch Links:
Vital Signs Fact of the Week Archive
Vital Signs 2003 press release
Take action: Vital Signs 2003, What You Can Do
More research from Worldwatch
Additional Resources:
Institute for Policy Studies: CEO/Worker Pay Gap Study:
www.ips-dc.org/projects/execexcess2001.htm
