Core Insights - CEO pay at top American companies reached a median of $16.8 million in 2024, marking a 7.4% increase from the previous year, while average worker pay rose by less than 4%, insufficient to keep pace with inflation [1][2] Executive Compensation Structure - Executive pay is typically structured with multiple components, including performance-based pay linked to company stock performance, base salary, bonuses, stock awards, stock options, and perks [4][7] - Compensation decisions are made by a board compensation committee, often with external consultant support and some input from shareholders [4] Historical Trends - There is a significant and widening gap between executive pay and worker pay, with CEO-to-worker compensation ratios increasing from 21-to-1 in 1965 to 290-to-1 in 2023 [7] - From 1978 to 2023, CEO pay increased by 1,085%, while typical worker compensation only rose by 24% [7] Comparative Metrics - CEO compensation has outpaced that of other high earners, such as senior lawyers and investment bankers, indicating a unique trend where CEO pay has grown faster than the top 0.1% of wage earners [8][9] - The compensation structures for CEOs have increasingly been tied to equity grants and performance shares, allowing for exponential growth when stock prices rise, unlike other high-income professionals whose earnings have tracked broader economic trends [9]

Core Insights - The spending of the top 20% of U.S. households has significantly outpaced inflation since the pandemic, indicating a reliance on wealthy individuals for economic stability [2][3] - A warning has been issued regarding the potential economic trouble if the spending of these affluent households decreases [2][3] - There is a growing financial divide in the U.S. economy, with higher-income households experiencing stronger wage growth compared to lower-income households [3] Economic Impact - The U.S. economy is largely powered by the spending of wealthy individuals, and as long as they continue to spend, the risk of recession remains low [3] - However, a shift towards more cautious spending by these households could lead to significant economic issues [3] - Moody's Analytics has indicated a 48% probability of a U.S. recession within the next 12 months, highlighting concerns about rising inequality and a "jobs recession" [3] Income Inequality - Jamie Dimon, CEO of JPMorgan Chase, has commented on the growing income inequality, emphasizing the need for economic growth that benefits everyone [4] - Dimon pointed out that the bottom 30% of income earners have not seen improvements, contrasting with the success of the top 0.1% [4] Market Performance - The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ) have shown significant increases of 12.9% and 15.66%, respectively, reflecting market responses to economic conditions [4]

Behind a paycheck, the largest source of income for the 1% highest earners in the U.S. isn’t being a partner at an investment bank or launching a tech startup.It is owning a medium-size regional business.Many of them are distinctly boring. https://t.co/pwVJQYkuZ6 ...