Measuring CEO Pay
Measuring CEO pay is an inexact science. There have been, over the years, a number of annual surveys undertaken by business consultants and the business press, the longest-running (and methodologically most consistent) being the annual Wall Street Journal report on CEO compensation, Since the early 1990s, the Standard & Poor’s (S&P) Executive Compensation database (Compustat) has tracked the compensation of the five executive officers in each of the S&P 500 companies. Longer runs of data can be assembled by sampling from SEC (Securities and Exchange Commission) reports required of publicly-traded firms for the years before 1992 (the approach taken by Carola Frydman and co-authors--see, e.g. Frydman and Saks, Executive Compensation: A New View from a Long-Term Perspective, 1936–2005), or by extrapolating the Compustat numbers back across the 1965-1992 Wall Street Journal reports (the approach taken by Larry Mishel at EPI--see Mishel and Sabadish, Methodology for measuring CEO compensation and the ratio of CEO-to-worker compensation).
Different surveys of executive pay use different subsets of companies, including the full S&P 500, the top 500 or 350 companies by sales, or the top 100 companies. Estimates are also complicated by the complex and shifting nature of executive pay, which includes not only salaries and benefits, but also stock options and other benefits which are difficult to value--especially in estimating annual compensation packages (see Jeffrey T. Brookman, Tomas Jandik, and Craig G. Rennie, A Comparison of CEO Compensation Data Sources [2010]). Comparison with worker pay is often constructed using the average wages of production and nonsupervisory workers. The preferred method is to use the industry-specific averages for pay and benefits of typical workers.
For different takes on this annual measure, see
- Institute for Policy Studies, Executive Excess (2013)
- AFL-CIO, Executive Paywatch (ongoing)
- The Wall Street Journal/Hay Group Survey of CEO compensation (2012)
- Forbes, America's Highest Paid Chief Executives (2012)
- Bloomberg, Top CEO-Pay Ratios (2013)
Discussion of "Measuring CEO Pay"
Add your voice to this discussion.
Checking your signed in status ...