When CEO pay exploded (update)

Planet Money

2025/09/17

Overview Shownote Highlights Transcript Chapters Pins

Shownote

(Note: A version of this episode originally ran in 2016.) It’s no secret that CEOs get paid a ton – and a ton more than the average worker. More than a hundred times than what their average employee makes. But it wasn’t always this way. So, how did this...

Highlights

The massive gap between CEO and worker pay today wasn't always the norm. This episode traces the pivotal moment when executive compensation began its steep climb, revealing how a well-intentioned policy decision set off an unintended chain reaction that reshaped corporate pay forever.

05:31

Performance-based pay exemption in the 1993 tax law fueled CEO pay growth

13:46

Stock options dilute shareholder value and are not free despite being treated as such in accounting

16:24

Stock options were treated as free, causing CEO pay to soar

22:58

CEO-to-median-employee pay ratio has risen to nearly 190:1

Chapters

What sparked the CEO pay explosion in the 1990s?

00:00

How did stock options become a hidden cost for companies?

10:57

Why did the bubble in executive pay eventually burst?

16:24

Is the widening pay gap sustainable—or even fair?

22:58

Transcript

Speaker 5: This message comes from NPR sponsor Charles Schwab. Financial decisions can be tricky. Your biases can lead you astray. Financial Decoder, an original podcast from Charles Schwab, can help. Download the latest episode and subscribe at schwab.com...