Mark Zuckerberg is paid so much it distorts CEO pay studies

June 12, 2014
June 12, 2014
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Last year, the average CEO was paid $15 million, while the average worker at the same companies was paid $52,000. That’s one of the takeaways from comprehensive new research released today by the Economic Policy Institute, a left-leaning American think tank, which examined CEO salaries at the 350 largest companies in the US. The chart above shows one of the metrics the researchers use, the gap between CEO salary and the average salary of a worker in the same sector.

As you can see, recessions tend to hit top executives in the pocketbooks (because of all those equity compensation plans) but the trend is clearly headed upward again: In 2013, the average CEO was paid 296 times more than than the average worker.

While that number is amazing, even more amazing is what it doesn’t include—the compensation of Facebook CEO Mark Zuckerberg, which was $3.3 billion last year. If that number were included in the analysis, average CEO pay in 2013 would have been 510 times that of the average worker.

This disparity exacerbates growing concerns about income inequality, and to EPI’s researchers it suggests a problem: The high payments to CEOs aren’t reflective of their contribution to their firms, but rather a compensation process loaded with conflicts of interest. They suggest that the US government should tax performance pay again—cutting off a tax deduction that Facebook has used to great effect—and that it should set higher corporate tax rates for firms with extremely high ratios of CEO-to-worker pay.

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