American Economic Review Vol. 94 No. 2 2004
CEO Pay and Appointments: A Market-Based Explanation for Recent Trends
Abstract
Very few business topics attract as much public attention as the paychecks of top executive officers in the largest U.S. companies. Undoubtedly, part of this interest has been fueled by the large and continuous increases in chief executive officers ’ (CEOs) compensation over the past three decades. Even ignoring the more recent escalation in the use of executive stock options (Brian Hall and Kevin J. Murphy, 2000, 2003), the base salaries and bonuses of Forbes 800 CEOs increased from an average of $700,000 in 1970 (in 2002-constant dollars) to over $2.2 million in 2000. 1 During the same period, the ratio of CEO cash compensation to average pay for production workers increased from about 25 in 1970 to nearly 90 in 2000. 2 The most prevalent explanation in popular press for this trend is the “fat cat ” theory, a variant of which has been espoused among academics by Lucian Bebchuk, Jesse Fried, and
- DOI
- 10.1257/0002828041302262
- Volume
- 94
- Issue
- 2
- Pages
- 192-196
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex