"If Corporate America is serious about reforming itself, CEO pay remains the acid test... The results aren't encouraging." Warren Buffett wrote this in a 2004 letter to shareholders following the Annual General Meeting of his company Berkshire Hathaway
According to the Bloomberg Pay Index, which ranks the highest paid US executives, Nick Woodman CEO of GoPro
Earlier in February, Google CEO Sundar Pichai received the company's largest ever executive award of a $199 million stock grant, over 273,000 shares which will be given quarterly thru 2019. For comparison Apple
CEO and other executive pay for publicly traded companies are decided upon by the company Board of Directors which normally assigns a compensation committee to create these pay packages. The NYSE and NASDAQ require that a company's compensation committee may be comprised only of independent board members due to the significant impact their decisions may have on a company and subsequently the market. These committees choose "peer" companies to compare themselves to and offer compensation comparable to their respective industries, which as of 2006 must be disclosed per Securities and Exchange Commission (SEC) regulations. However, the "peer" companies chosen are generally larger, in some cases over twice the size in terms of revenue or market capitalization, and seem to serve as a means to continue supporting the system in place. In 2011 the SEC furthered their requirements by instructing companies to hold a non binding vote for their shareholders. Aflac Chairman and CEO Dan Amos elaborated on the rule stating that, "Our shareholders, as owners of the company, have the right to know how executive compensation works." While it would be nice to believe that every voice will be heard, at the end of the day the decision still lies with the Board of Directors. In an age of increasing transparency it should be harder for companies to rationalize these payment packages. An August 2015 approval of a new SEC rule takes aim at the issue by forcing companies to include in their financial statements the ratio of CEO pay to the median pay of their employees, which is the middle of the pay scale not the average. New Jersey Senator (D) Robert Menendez, a proponent of the rule, explained how there are "middle-class Americans who have gone years without seeing a pay raise, while CEO pay is soaring." Companies were quick to combat the decision claiming the cost to them would be harmful and could cause problems with investors who do not understand how pay is calculated. Columbia University Law Professor Robert Jackson Jr. acknowledges it will cost a pretty penny, but can also provide a company and its investors with a "more systematic understanding of what their employees earn."
French economist Thomas Piketty set the world on fire in 2013 with his book "Capital in the Twenty First Century" where he chronicled the income inequality in Europe and the US since the 18th century. This publication sparked a global outrage and started important conversations the world over about the widening gap between the rich and the poor. The wealthiest family in the United States, Wal Mart