Friday, March 25, Stock Options: In turn, the widespread granting of stock options was fueled in part by a law which will forever exemplify the Law of Unintended Consequences. But although stock options helped generate a huge one-time jump in inequality of compensation, they now seem to have a diminishing role as a form of executive compensation. As background for this theory, it's useful to review a few main facts and patterns about executive compensation and income inequality.
A blog about business and economics. Life ain't fair, so let's force workers to bear cost of shoring up crumbling financial system. My question to Resnikoff was which non-workers are available to pay the cost? His proposal, I think, common to most progressives is that high income people ought to pay the cost, which I'm sympathetic to.
But it's worth noting that this rhetoric about "workers" is really a legacy of an outdated time. As Thomas Piketty and Emannuel Saez write in one of their celebrated papers on the death and rebirth of inequality in America PDF"this rise of top income shares is due not to the revival of top capital incomes, but rather to the very large increases in top wages especially top executive compensation.
As a consequence, top executives the 'working rich' replaced top capital owners the 'rentiers' at the top of the income hierarchy during the twentieth century. Today relatively few companies are managed by their owners.
What's more, the kind of rich people least likely to prompt public resentment are the Mark Zuckerbergs and Bill Gateses -- the entrepreneurial capitalists who did primarily make their money through equity stakesin the firms they founded. But your average workaday fat cat CEO is, in a way, just a very well-compensated wage slave.
That wasn't true in the era before the Great Compression of the income distribution that happened in the middle of the 20th century, but the New Gilded Age is substantially different from the original in this respect.Excessive executive pay, in comparison to pay in job grades lower down the scale, is of course only one aspect of the inequality problem: in South Africa, the apartheid legacy has left vulnerable members of our society living on the outskirts of economic activity, with poor access to public facilities such as transport, health and education.
However, pay is a major factor in general income inequality, and there is now increasing evidence that this is a strong driver of a range of health and social problems, including poor mental health, drug use, obesity, poor educational attainment, teenage pregnancy and violence x.
According to EPI, CEO pay is also growing at a much faster pace than even the average pay of the top % of income earners in the US. From to , CEO compensation grew % (on the stock options granted basis) or 1,% (based on the stock options realized basis).
CEO Pay Ratio and Income Inequality: Perspectives for Compensation Committees. Posted by Ira Kay and Blaine Martin, Pay Governance LLC, on. Tuesday, October 25, Comments Off on CEO Pay Ratio and Income Inequality: Perspectives for Compensation Committees Income inequality and executive compensation are two .
Income inequality has often been attributed to top executives reaping a windfall while their workers’ pay stagnates.
|Search This Blog||The chart below shows what we found.|
|Executive pay continues to grow faster than median pay in Canada | SHARE||Does executive pay feed income inequality — and how can we fix it?|
|Does executive pay feed income inequality – and how can we fix it? | UCT News||There has also been debate about what governments have actually been doing about inequality, with claims that the Turnbull Government has surrendered to "the politics of inequality", according to researchers from the Centre for Independent Studies arguing for further cuts in public expenditure. The evidence for trends in inequality is mixed.|
|Top Stories||Compensation for the average US worker grew 0.|
|The Conversation||Australia Australia should follow the lead of the United States in requiring public companies to disclose how much their CEO makes each year directly compared to an "average" rank and file employee.|
As my Capital Account column notes, that story misses something important. The Factors That Lead to High CEO Pay.
Gretchen Gavett; May 22, a single one of these factors as the determinant of income inequality. is an associate editor at Harvard Business Review.