Wednesday, May 22, 2013

How much do CEOs really make?

The Huffington Post observes that pay for "[t]he head of a typical large public company" was $9.7 million in 2012, a record high. But what really is the "typical" large company, anyways?

From the BLS, the mean Corporate Executive pay is $176,840, and the median $168,140. Obviously the well-paid outliers drive up the mean, which explains why it's higher than the median. However, the enormously well-paid executives are indeed outliers.

There are roughly a quarter of a million Corporate Executives employed in the U.S., and the vast majority are not seeing seven-figure salaries. The public furor over excessive corporate pay is an anomaly for the profession, not the norm. But depending what sample you look at, there is always something to feel outraged about.

Tornadoes and nuclear weapons

The recent tornado in Oklahoma is a great disaster, but the comparisons it has spawned are perhaps just as disastrous.

Fox News:
Several meteorologists consulted by the Associated Press estimated the tornado's energy released during the storm ranged from 8 times to more than 600 times the power of the Hiroshima bomb, with more experts at the high end.

True perhaps, but also highly misleading.

1. The tornado lasted 50 minutes, vs. a nuclear bomb going off instantly. In terms of "power per second", the tornado barely compares.

2. As modern nuclear weapons go, the bomb dropped on Hiroshima was tiny. It was 15KT, while the largest weapon tested was 15MT - a thousand times more powerful.

So yes, the tornado was bad, really bad. But comparing a natural disaster to a man-made catastrophe is rather deceptive.