I have received some inquiries from my readers who have read Do you know how much your CEO make? (Canadian edition) and wondered about how much American CEOs would make.
According to Floyd Norris, New York Times, American corporate profits are at their highest level in at least 85 years whereas employee compensation is at the lowest level in 65 years. To make things worse than it is, CEO to average worker compensation ratio in 2012 of 273 was far above that of the late 1990’s and 14 times the ratio of 20.1 in 1965 (Economic Policy Institute, Lawrence Mishel, 2013). That means, Money earned by CEO when he/she travels to one of the most popular golf courses in US in his corporate jet and plays golf with his golf buddies in a beautiful sunny day is higher than an average American’s annual pay cheque and we wonder why we have an income inequality problem in America.
Did you know that the top 100 highest paid CEOs in America make on average $30.3 million ($15,000 per hour)? That is 3.3 times higher than top 100 highest paid CEOs in Canada’s average compensation of $9.2 million and 585 times higher than 2013 American median household income of $51,759 per U.S Census Bereau.
The listing is compiled by AFL-CIO, America’s Union website that claims that tries to draw attention to the unfair compensation gap between the top dog CEOs and the average employees like us. Did you find your CEO here? How does it compare to your last pay stub?
2 hours paycheque for Charif Souki from Cheniere Energy Inc (Assuming 40 hours of work week, his hourly wage is $68,000) is higher than my family’s very hard-earned life savings of $120,000.
My favorite investor of all time Warren Buffett stated in Berkshire Hathaway Inc’s 2005 annual report that “Getting fired can produce a particularly bountiful payday for a CEO, Indeed, he can ‘earn’ more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure.”
I have been very confused as I own some of those great companies in my portfolio through stocks and ETFs. Many of them are listed in Dow and NASDAQ and great blue chip companies. What’s really going on in the world? Do the CEOs really deserve that unfairly high compensation? Is paying that enormous salary extremely necessary in managing those already solid companies? All of sudden, I remember Richard Gwyn, Canada’s well known journalist, mentioned in his article “One of the main activities of American executives these days is figuring out ways to cut the pay of their workers while at the same time hanging on to all they have” Did you find your CEO here? How does it compare to your last pay stub?
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