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An Increase in CEO Pay
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An Increase in CEO Pay

Source: Harvard Law Published: September 2018 n = ~400 companies

Danny Sheridan
Jul 8, 2020
Share this post
An Increase in CEO Pay
www.factoftheday1.com

Source: Harvard Law
Published: September 2018
n = ~400 companies

An Increase in CEO Pay

Circulated: July 8, 2020

For the period 1990 through 2016, median CEO pay at large US companies grew by over 400%. Researchers found the following factors to have contributed to this:

  • Public disclosure of CEO pay: the creation of the SEC in 1934 made the disclosure of executive compensation mandatory for all publicly traded firms. By comparing pay, CEOs pressured companies to pay more.

  • Growth in company size: as companies got bigger, so did CEO pay. For a 10% increase in company size, CEO pay goes up by 3%.

  • CEO turnovers: the median CEO tenure in 2017 was 5.0 years (down from 6.0 years in 2013). Incoming CEOs are paid more, on average, than the departing CEO.

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