The income gap has only become larger in the past few years, as the stock market saw record gains. And the inequality is particularly glaring in the pay packages of the country's chief executives.
All 50 of the highest paid CEOs of Minnesota public companies in 2021 earned more than $1 million from salary, bonuses and realized stock awards, with the median pay package at $6 million. Thirteen chief executives earned more than $15 million, three over $50 million.
In a national survey of 200 large companies by compensation consulting firm Equilar for the New York Times, the 10 highest paid executives in 2021 all had packages over $100 million, with average compensation $330 million, the highest ever. (Equilar/NYT uses a different formula to count total compensation.)
In the Star Tribune's review of Minnesota public company proxies, only one CEO made more than $100 million: David Ossip of Ceridian HCM Holdings, who earned $120.5 million, mostly from stock awards.
The big question is whether the pay is justified, especially compensation built on long-term equity awards — and how it affects the performance of the companies. In Minnesota, 43 of the 50 highest paid CEOs saw most of their gains come from long-term equity awards.
"Twenty million dollars in compensation wouldn't bother me a bit, if what that individual did was add $300 million to $500 million worth of asset value for the firm — and the employees got some of that," said James Bailey, a professor of leadership at the George Washington University School of Business.
While numbers vary, sometimes widely, from company to company, employees are at least not getting the same share of wealth from a firm's equity.
The Economic Policy Institute, an independent nonprofit think tank that studies economic trends, looked at the pay of CEOs at the 350 largest companies in the U.S. each year by revenue. One finding: Compensation was $1.7 million in 1978 and rose 1,322% to $24.2 million by 2020.
CEO pay grew 60% faster than the overall stock market during that time. Typical worker income in the industries those 350 CEOs represented grew 18%, indicative of growing income inequality.