What About This Pay Gap? CEOs vs. Celebrities
According to this AP story, CEOs of 386 companies in the S&P500 that filed proxy information in the first half of this year received a combined $4.16 billion in 2006, which is an average compensation of $10.77 million per CEO (see graph above).Yahoo Inc.'s Terry Semel led the pack with total compensation last year of $71.7 million, according to the AP formula used to analyze those filings, which adds up salaries, bonuses, perks, above-market interest on pay that is set aside for later and what companies estimated the present value to be of restricted stock and options awards on the day they were granted last year.
According to the Forbes Celebrity list, the top 100 celebrities earned a combined total of $3.286 billion, or an average of $32.86 million per celebrity from June 2006 to June 2007, which according to Forbes "includes dollars earned solely from entertainment income."
Oprah topped the celebrity list with a whopping $260 million in earnings, or more than 3.5 times the highest CEO, followed by Tiger Woods with $100 million in pay.
Do a Google search for "excessive CEO pay" and you'll get about 10,000 hits. Now try a search for "excessive celebrity pay," and you'll get exactly 0 hits.
Another factor to consider when comparing CEOs and celebrities is the amount of time worked per year. Most people would agree that CEOs work full-time, year-round, probably 60-hour weeks, whereas a lot of athletes, musicians and actors (Madonna, Kobe Bryant, Shaq, Bon Jovi) realistically only really work during part of the year. On a per-hour basis, the "pay gap" between CEOs and celebrities would be even greater!
7 Comments:
apples to oranges. You have taken the 100 top actors and compared it to the CEOs of the S&P 500 which number 389...
If you only have S&P500 data available, then take the top 100 from that list; but it would be even better if you had the top 100 CEO salaries, regardless of whether they are listed on the S&P500.
I disagree with it being apples to oranges. There are far more large businesses than there are major celebrities. I would imagine that the S&P 500 CEOs are in the same percentile as the top 100 celebrities.
It's true that I'm comparing the average salaries of the top 100 celebrities to the top 389 S&P500 CEOs. However, the AP database for all 389 CEOs is not available, and the Forbes Celebrity list does not include the top 389 celebrities. But according to the AP report: "The top 10 CEO earners were in disparate industries, but they all had one thing in common: They were paid at least $30 million each in 2006." According to the Forbes Celebrity list, we could say that "The top 10 celebrity earners have one thing in common: they were paid at least $70 million each," or more than twice as much as the CEOs.
Um, this comparison is apples and oranges - and not just because of the different sample size. First of all the Forbes list includes celebrities like U2, the Rolling Stones, the Desperate Housewives cast, and the Grey's Anatomy cast. Just dividing the $3.2 billion total salary by the 126 actual people mentioned in the list knocks the average down to $25 million. And that is $25 million from which "Management, agent and attorney fees have not been deducted." Since many of these celebrities are really businesses unto themselves this is like comparing net income to gross income.
The other problem with using the Forbes list is that "Rankings are generated by combining earnings with other metrics: Web mentions on Google press clips compiled by LexisNexis; TV/radio mentions by Factiva; and number of times a celebrity's face appeared on the cover of 32 major consumer magazines." This results in the bottom two earners being Hayden Panattiere and Boby Flay, who both make only $2 million, which is less than many professional athletes, who did not appear on the list, earn.
I would tend to agree with overall point about CEO pay relative to celebrity pay, but I do not think that a straight comparison of these two lists makes the point.
So the long and the short of it is that we pay far to much in theater money, products (advertising dollars that in part go to actors), and wasted time on actors for less than mediocre entertainment value?
To Michael, Just to clarify: The Forbes Celebrity 100 list ranks celebrities by a) pay, AND b) web rank, c) press rank and d) TV rank.
When they say:
"Rankings are generated by combining earnings with other metrics: Web mentions on Google press clips compiled by LexisNexis; TV/radio mentions by Factiva; and number of times a celebrity's face appeared on the cover of 32 major consumer magazines,"
that is only for the web, press and TV rank, and NOT the pay rank.
The first thing I thought was "apples to oranges." Unfortunately, I'm not going to prove this empirically because I don't care enough to do so, but the top paid CEO's FAAAAARRRRRR outweight the top Celebrities.
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