The gap between how much a CEO vs employee earns used to be nowhere close to 344X. In 1990, it was 75X. In 1965 it was just 21X.
One big driver of CEO compensation is because the majority of what a CEO gets paid is in the form of equity, like stock options. This is supposed to incentivize CEOs to run the business well and boost their company’s stock price.
Is the main takeaway from this post to become a CEO? Not really, unless your name is John, because you’re more likely to become a CEO than any other name. (23 of the S&P 500 CEOs are named John/Jon!). But this is a reminder to find ways to work smarter. Learn to invest so your money is working for you. CEOs work hard to get their stock prices up and you can benefit from this. By buying index funds, you can own a small slice of all of the biggest companies in the world, without having to work any harder.
The CEO compensation in this post is based on data from the Economic Policy Institute that looks at CEOs from the 350 largest public companies in the US based on revenue.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
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