Is The End Of Gigantic, Unfair, And Absurd CEO Pay Near?

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By Richard Finger, Contributor

CEO (Chief Executive Officer) pay is like an out of control wildfire with firefighters who have seemingly all but giving up combating a blaze they deemed too infernal to extinguish. With great help from Forbes statistician Scott DeCarlo we can put some numbers to this conflagration. Way back in 1986 the top 10 CEO’s on the Forbes list earned in aggregate $57.88 million and the top paid corporate chieftain was legendary Chrysler CEO Lee Iacocca at $11.50 million. Leap ahead to the 2012 Forbes list on which the highest paid ten totaled a whopping $616.40 million or 10.65 times the amount of the class of 1986. I did some more arithmetic and determined that during these intervening 26 years the CPI (Consumer Price Index) “snailed” ahead only about 103 percent. With my calculator still revved up I then determined that the top ten of class of 2012, if they had just kept pace with the CPI since 1986 would have earned cumulatively only $117.50 million, about a half billion less than their actual haul of $616.40 million. Inflation adjusted, in 2012, Mr. Iacocca would have grossed $23.34 million or about 17.8 percent of the $131.19 million of 2012 pay champion John Hammergren of McKesson. Even at the adjusted $23.34 million number Mr. Iacocca would be in only 46th place on the 2012 list just behind Larry Fink of Blackrock. Bear with me for a final telling statistic and I’ll leave you alone. CEO remuneration since 1986 has shown accretion of 965 percent versus 103 percent for the CPI. Does this conflagration continue unchecked, fueling the flames of animosity and fraying the fabric of American society, or is the rubber band finally at a breaking point? Let’s have a look at how we got to this parlous state and finally examine the implications for American executives of some of the positive developments on the compensation front from across the Atlantic in Europe. …read more
Source: FULL ARTICLE at Forbes Latest

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