Sunday Spectacle CLXXI

The Ever-Rising Executive Compensation

I've been thinking about writing about the controversy over the rising executive compensation in North America. Here are some graphics that frame the current situation (chart data up to mid-decade).

I actually don't think rising executive compensation is as big of an issue as it seems. The rising discrepancy in wealth is caused by society starting to reward talent—not just in business but also in sports, media, and so forth. As you'll note in one of the charts below, a lot of the increase in compensation is from bonuses and equity-linked compensation. Base salaries of executives haven't gone up much; the issue, thus, is whether the "bonus" is deserved. So far, shareholders and owners seem to be satisfied with management performance and are willing to award large discretionary bonuses.


Structure of Executive Compensation
(source: "Executive Compensation: A New Solution to an Old Problem," FTI Journal, Issue 2 - April 2010.)


Executive Compensation
vs
Average Worker Compensation
(source: "In the money," The Economist. January 18, 2007)


The Cynics Might Say...

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