Stock-based executive pay widened CEO-worker income gaps.

Evidence

Because compensation was tied to stock market performance, corporate CEOs now routinely earn incomes several hundred times higher than those of average workers (Bebchuk & Grinstein 2005, Englander & Kaufman 2004), with annual salaries hitting eight and even nine figures. Contemporary compensation systems for top executives are tied much more directly to the firm’s stock market performance and the compensation of peers rather than to product market performance (DiPrete et al. 2010). Meanwhile, those lower on the corporate hierarchy receive lower wages and fewer benefits (Fligstein & Shin 2007, Lin & Tomaskovic-Devey 2013). — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 56

Categorization

• XREF: Connects to the reader’s existing work on ‘Grafting & Growth’ tangentially, but more directly to general financialization literature on the causal link between stock-linked pay and intra-firm inequality. — connects to: Union density raises both low-level wages and top executive compensation — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 139; Early computer-investment effects on executive pay depend on business services — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 138; Industrial concentration raises top officers’ share of compensation while employment size lowers it — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 145 (+12 more)

Related

• Shareholder-value incentive pay enriched managers more than shareholders themselves (similarity 0.84)
• Industrial concentration raises top officers’ share of compensation while employment size lowers it (similarity 0.82)
• Boards packed with CEOs set each other’s pay higher (similarity 0.81)
• Union density raises both low-level wages and top executive compensation (similarity 0.80)
• Corporate outsourcing and CEO pay inflation stem from neoliberal theory, not efficiency (similarity 0.79)
• Financial earnings at nonfinance firms raise executive bargaining power with boards. (similarity 0.79)
• Inequality dimensions reflect one institutional shift toward financialization (similarity 0.79)

Broader Connections

• Shareholder-value incentive pay enriched managers more than shareholders themselves #corroborates (0.95) — Natascha van der Zwan, Making Sense of Financialization, 54
• Live Nation’s CEO has the widest pay gap in the entire Fortune 500 #exemplifies (0.90) — Andrew deWaard, Derivative Media, 232
• Financialization theory links wage-compromise collapse and shareholder value to inequality #corroborates (0.90) — Natascha van der Zwan, Making Sense of Financialization, 109
• Agency theory, not financial economics, legitimized executive stock-option compensation #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1174
• Financial income reallocates resources away from workers and strengthens owner bargaining power #corroborates (0.85)
• Corporate outsourcing and CEO pay inflation stem from neoliberal theory, not efficiency #expands (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 175
• Boards packed with CEOs set each other’s pay higher #qualifies (0.80) — Andrew deWaard, Derivative Media, 120
• Financialization raises earnings inequality across most US industries #expands (0.80) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 152
• Corporate structure shields executives by diffusing responsibility #complicates (0.75)
• A toy maker’s CEO hire signaled a shift from products to data collection #exemplifies (0.75) — Shoshana Zuboff, The Age of Surveillance Capitalism, 832