Despite media hype about CEO compensation, the average CEO last year made only $178,400, and got a raise of < 1%

Carpe Diem reports:

Every time that CEO salaries of large companies are reported, there’s always a lot of hand-wringing, criticism of “excessive CEO compensation,” and the inevitable comparisons of rising CEO salaries to stagnant pay for average workers and how that fuels rising income inequality, etc. It must be that time of year again – “CEO bashing season” – because there have been a number of news reports this week about CEO pay in 2013, with the typical comparisons to average worker pay. For example:

The Associated Press (AP) reported this week that “Median CEO pay crosses $10 million in 2013” (which is 257 times the average worker’s salary, up sharply from 181 times in 2009) and the Wall Street Journal released its annual compensation survey this week and found that median CEO pay in 2013 increased by 5.5% to $11.4 million.

While the huge multi-million pay packages of a few hundred CEOs get all of the media attention, what usually receives much less attention is the small number of CEOs represented in the annual salary surveys, especially compared to the total number of CEOs in the US. For example, the WSJ’s survey included only 300 CEOs at large, U.S.-traded public companies, and the AP analyzed compensation figures for only 337 companies in the S&P 500. An analysis of CEO pay by USA Today in April looked at only 200 CEOs in the S&P500. The AFL-CIO did an analysis of the CEOs of 350 companies in the S&P500 and then computed a “CEO-to-worker pay ratio” of 331 times ($11,700,000 average annual CEO pay to the $35,239 average annual worker pay), up from a ratio of 300 ten years ago and 200 twenty years ago.

Although these samples of 200-350 CEOs are representative of large, publicly-traded US companies, they certainly aren’t very representative of the average US company or the average US CEO.

According to the US Census Bureau, there are more than 27 million private firms in the US, so the samples of 200-350 firms for CEO pay represent only one of about every 100,000 private firms in the US, or about 1/1000 of 1% of the total firms. And yet the AFL-CIO, AP and others compare the average annual wages of hundreds of millions of full-time employees working at the more than 27 million US companies to the CEO pay of executives at only several hundred companies, which is hardly a fair comparison.

The big lies of the mainstream media exposed. In fairness though: how many journalists have taken an economics class? Or know that the demand for labor is a downward sloping curve?