Why has CEO pay exploded?

Most CEO's pay is now hundreds of times average weekly wages, John Addis investigates why.

In the first chapter of Predictably Irrational, Dan Ariely explains how in 1976 the total compensation for the average chief executive officer (CEO) in the United States was about 36 times that of the average worker in their companies. By 1993, it was 131 times and public outrage was growing.

So the SEC issued a new rule requiring companies to disclose CEO pay. The bureaucrats believed that as soon as the disparity was visible to shareholders, the market would fix the problem and excessive pay would be competed away.



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