Auros (auros) wrote,
Auros
auros

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CEO pay...

CEOs have always argued that companies need to pay them gigantic salaries, because you need to pay top dollar to get the folks who will lead the company to greater profits. Well, it turns out that the CEO's share of a company's compensation to its top five executives* is indeed related to profitability. Inversely related. Why am I not surprised?

* I'd be willing to bet that the kind of company that awards the lion's share of compensation, from among the top-5, to the top-1, is also the kind of company that awards more compensation to the top-5, relative to the top-100, and so on. Certainly that's how the overall income distribution across the country works. To a first approximation, the US income distribution is an 80-20 power law; within any slice starting from the top, the top 20% within that group earns as much as the other 80%. The top 0.2% earns as much as the remainder of the top percentile, the top percentile earns as much as the 95th-99th, the top 5% earn as much as the 75th to 94th percentile, and so on. (This may not hold precisely true, but it's reasonably close. And I believe the wealth histogram is even more concentrated -- something like a 90-10 power law.)
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