An Increase in CEO Pay

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

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.