Income Inequality: CEO Compensation Edition

Moneybox
A blog about business and economics.
May 28 2014 3:32 PM

Income Inequality: CEO Compensation Edition

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Larry Ellison earned $76.9 million in 2013.

Photo by Toru Yamanaka/AFP/Getty Images

We know about the 99 percent. But what about inequality at the very top of the top? The Wall Street Journal has drawn our attention to the tremendous pay imbalances among CEOs at 300 large companies with its annual compensation survey. According to the report, the three highest-paid CEOs—Larry Ellison of Oracle, Leslie Moonves of CBS Corp., and Michael T. Fries of Liberty Global—raked in a total of $188 million in 2013, more than the bottom 50 CEOs on the list combined.

The entire top 10 percent accounted for nearly one-quarter of the compensation among the CEOs surveyed, while the bottom 30 percent earned just 13 percent of that total. To put some numbers to those names: Ellison earned $76.9 million in direct compensation in 2013; Moonves brought in $65.4 million; and Fries made $45.5 million. (Ellison needs that much money in order to continue playing basketball on a yacht.) The rest of the top-10 earners tallied somewhere between $28.2 million (General Electric's Jeff Immelt) and $38.9 million (Freeport-McMoRan's Richard Adkerson). 

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Making the compensation inequity worse, those in the top 10 percent also saw raises more than three times the median—even though, by and large, they did not rank in the top 10 percent for shareholder performance. Only two of the best-performing CEOs—James Cracchiolo of Ameriprise Financial and Lamberto Andreotti of Bristol-Myers Squibb—also ranked in the top 10 percent for pay. Median compensation for the sample rose 5.5 percent to $11.4 million.

Google's Larry Page, Amazon's Jeff Bezos, and Berkshire Hathaway's Warren Buffett were among the chief executives who came in at the very bottom of the list: These CEOs took little or no direct compensation for their positions in 2013—nor do they need it. They've made their billions and retain hefty stakes in their companies that keep up the earning for them. Buffett made $37 million a day in 2013 and a full $1 billion in the first 22 hours of March Madness, but his total direct compensation is listed at just $100,000. Which prompts the question: If Larry Ellison is the third-richest man in America—right behind Buffett and No. 1 Bill Gates—then why does he still have such an obscene compensation package?

Alison Griswold is a Slate staff writer covering business and economics.

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