Fast forward to 2022, and CEOs were making 344 times the typical worker.

Congrats, fellas.

But also, how the f*** did that happen?

As I embarked on reporting this dangerous story, I decided the first thing I had to do was take some precautions, because if I was going to publicly question whether the richest, most powerful people in the world actually deserve their paychecks, I was going to have to do it incognito.

Now that I was in disguise, it was time to do some investigative journalism.

Why the f*** do CEOs make so much money now?

That's a really good question.

And I don't think there's a super simple answer to it.

Sorry, Dan Toomey only does simple.

Next nerd, please.

Well, that's a great question.

You've got two answers.

That's what I'm talking about.

One camp says it's rent-seeking.

That's an economist's fancy term for they get paid a lot because they can get away with getting paid a lot.

They essentially are extracting resources from the company.

The other side says it's an efficient market for executive talent.

There's competition to hire, you know, the best and the brightest, and it takes a lot of money to get the best of them.

So it looks like what we have here is a classic, they're extracting resources from the company and getting away with it, versus it's an efficient market for executive talent situation.

Don't panic, viewers.

I've been in one or two of these scrapes before.

Daddy's got you.

Now, Josh, I'll give you one more chance to talk straight.

If you look, you know, over the past 30 years, you know, the mathematical reason why CEO pay has risen so much is that the stock market has risen so much, and they have managed to just hook their pay to the wider stock market.

See, that wasn't so hard.

A treat for you.

These days, the top CEOs are making the vast majority of their money through stock-related pay.

This started back in the 90s when a rule implemented by the Clinton administration backfired.

You see, kids, back in the day, America had a president named Bill Clinton, and he was the only president to have received fellatio in the Oval Office.

That we know of.

Bill wanted to curb rising executive pay by declaring that any CEO salary over a million dollars was not a reasonable business expense worthy of a corporate tax deduction.

That way, companies would be incentivized not to pay their CEO much more than a million dollars a year.

But there was a loophole.

Performance pay, which included stock options and bonuses, was exempted from the tax-deductible cap.

Ever since, companies mostly pay their CEOs in performance rewards, like stocks or bonuses, while their actual salaries remain relatively low.

Which is how you end up with pay packages like Sue Nobby's, CEO of Coty, a cosmetics company that owns shops like Gucci, Calvin Klein, and Tiffany.

Sue, who's really catching strays this episode, took home about $150 million last year, with nearly $146 million of that coming from Coty stock she was awarded, which comes out to over 3,000 times the median Coty employees.

Now $150 million a year might seem bonkersville, but it also kind of makes sense to me.

I mean, shouldn't CEOs be rewarded if their company's stock is performing well?

However, wet towels like Josh are quick to ruin the fun and point out the problems with linking executives' pay to their company's stock prices.

You know, there are many things that can make a company's share price go up, and many of those things are well outside the CEO's control.

The hater's argument here is that if a stock goes up, well, it doesn't necessarily mean the CEO is doing a uniquely good job.

It just means something happened that drove up the stock price.

If you look at the CEO pay of oil companies, when the global price of oil rises, their pay rises, because that causes their share prices to go up.

It's ridiculous to think the CEOs had much to do with the global price of oil going up, and yet they just get rewarded for that luck.

So it was the stock market all along, huh?

Always is with these types, but I wasn't satisfied.

My investigative bone was itching, and I had to probe this story further.

What were the fundamental systemic conditions that allowed these opulent, silk-stocking executives to successfully negotiate such favorable remuneration?

That's right, I know words.

If you talk to the people who are in the camp saying, hey, this is an efficient market competition for executive talent, they're going to say you only have so many people who are really capable of running companies this big.

It really is a question that I think critics of executive pay often point to.

The question is, could you find someone who could do about as good a job for a bit less money, and have we set up these labor markets in such a way that that kind of open competition happens?

My guess is there are incredibly smart people out there who would have a real shot of doing about as good a job as Tim Cook.

What, this guy?

Oh, no, no, no.

There's no replacing this specimen.

Possibly the worst checkered flag waving in Formula 1 history by the Apple boss, Tim Cook.

All the wealth in the world, and all the iPhones and iPads and everything, can't give you a strong wrist and nice action to do that.

But in addition to the maybe unnecessarily small pool of candidates to pull from, there's another simpler reason why CEOs end up with mad stacks.

They tend to be pretty cozy with the people who are deciding how much they get paid.

In theory, the CEO is supposed to be the people that shareholders hire to run their company and maximize their profits.

CEOs are supposed to be doing the bidding of shareholders, and the shareholders' representatives are basically the boards of directors of big companies.

But it turns out these are really complicated companies, and there's millions of shareholders in each one, and it's up to a single person, usually the CEO, to even decide who sits on the board of directors.

And so basically, the CEOs are picking the people who are supposed to be their overseers and the people they're negotiating with about salaries.

Like Josh says, in theory, at a big public company, the CEO reports to the board of directors, who represent the shareholders' interests.

And it's typically the board's job to decide how much the CEO gets paid.

But if you're on the board and you're buddy-buddy with the CEO, it might be a little tough to decide on their pay objectively.

I mean, who doesn't want to see their boy get a bag?

Now granted, there are tons of public companies, each with different dynamics between their boards and executives.

But still, folks are def getting suspicious about how these companies decide on executive comp.

For example, in Delaware, where earlier this year a judge ruled in favor of Tesla stockholders who sued the companies saying that Elon Musk's 2018 pay package was unfair.

That judge in Delaware said, no, this process was not right.

This was flawed.

The board was too conflicted.

Too many people on the board and on the compensation committee had too many close ties to Elon Musk.

There's also the United Auto Workers Union, who in negotiations with top carmakers last year demanded a 40% increase in pay over the next four years, which they said would mirror the same pay gain their CEO saw over the previous four years.

Meanwhile, Bernie Sanders proposed taxing companies whose CEOs make more than 50 times the salary of their average employee.

But here's the thing.

It's not all unions and socialist Gandalfs lining up to take a closer look at executive pay here.

Even capitalist zaddies are speaking out.

Carl Icahn has said that many top CEOs underperform, are overpaid, and aren't held accountable by their boards.

Warren Buffett has described some executive pay packages as irrational and excessive, saying that compensation reform will only occur if the largest institutional shareholders demand a fresh look at the whole system.

Meanwhile, the federal government is getting in on the action, with the SEC announcing new regulations in the past couple of years designed to shine a light on the closed process through which boards decide on executive pay.

And yet my top secret sources agree with Buffett, saying that it's going to take a lot to change the status quo.

It keeps going up.

And I don't see a reason that that's likely to stop anytime soon.

There's a range of things you can imagine doing to get at this problem, but they do require systemic policy changes.

I think it is weird because often people think about CEO pay and it feels like a very populist issue, like CEOs versus workers, and that it is true that that is a clear contrast.

The number one group who's really getting hurt by CEO pay directly is shareholders.

Ah, the shareholders.

Us red-blooded Americans who get up in the morning, put in an honest day's work, and after a microwave chicken pot pie, do it missionary on the couch while Monday night football blasts through the old rabbit ears.

We should all care about this, because if you own stock or if you have a retirement account, then these corporate boards, who are supposed to be awarding CEOs with fair pay packages, are representing your interests.

And while there is evidence that people do care, there's also evidence that we don't fully understand just how much money top CEOs are making.

A 2016 survey from Stanford Business School, you know the one, estimated that about 70% of Americans believe CEOs are overpaid.

To update that, we had our publisher Morning Brew poll a sample audience of corporate hardos, and 87% of them agree that the discrepancy between CEO and worker pay is too high.

But from each of these surveys, another thing was clear.

People literally cannot imagine how much money CEOs make.

The Stanford survey estimated that the average American believed CEOs made just 1 tenth of what they actually make.

And in our better survey, almost 75% of Morning Brew's sample audience guessed that CEOs make 100 times or less than the average worker, when the answer is actually 200 times or more.

Which is like a lot, on a completely different scale than what most of us were thinking.

So now that we all know about this runaway train that is CEO pay, maybe we can think about slowing it down a bit.

Our companies will be a little more profitable.

Our economy, a little more equitable.

And goddammit, we need to get Tsunami under control.

So for Shareholders Everywhere, I'm Dan Toomey.

And I have been this entire time.

To enjoy something silly.

What's the point of the YouTube endcard?

There is no point.

In fact, the longer we make the endcard, the more we hurt our retention, the more we anger the algorithm.

But sometimes, it feels good to make the algorithm angry.

To do something for the dedicated ones, something for the sickos.

To those still watching, I say keep sitting around.

Keep doing nothing.

Watch another few dumb videos before you go back to the hyperspeed of life.

See you at the next endcard.