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[worldCitizen]

One of the most talked-about contracts topics: chief executive compensation contracts. When asked by reporters about the bonuses that some executives get, Holmstrom had this to say: “They seem extraordinarily high,” though he also notes that “in economics we don’t really take a stand on the size of the bonus.”

Just how high is “extraordinarily high”? Many times it’s seven-figures high.
In 2015, the annual compensation for a chief executive of one of America’s largest companies was $15.5 million on average, seven times higher than it was just 30 years ago, according to data released in July from the Economic Policy Institute. Furthermore, CEOs now make 276 times more than the typical worker does, up from 123 times more just two decades ago and just 20 times more 50 years ago.

See also: Wells Fargo CEO’s $41 million ranks only third among executive-pay clawbacks, forfeitures

But “only a small share of executive compensation is straight-up salaries,” says Lawrence Mishel, president of the EPI. “The vast majority is bonuses and stock options.” One analysis of executive pay at 50 large companies by The Wall Street Journal and Hay Group last year found that salary made up less than 12% of CEOs median pay, while bonuses made up nearly 21%, stock awards roughly 31% and options nearly 23%.
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