How much does your CEO make compared to you? Now, that ratio is public
That's 450 times the pay of Molina's median worker.
In
That was 215 times more than Edwards' median employee.
In
That was 439 times the salary of his company's median worker.
Across
"The titans of industry tried to bottle up this rule," said former
"CEOs have managed to plant themselves in a river of money," he added. "But the rise in productivity since the 1950s has not led to a parallel rise in workers' wages."
RECESSION LEADS TO REFORMS
Publicly-traded companies have been disclosing top managers' pay since 1933, information that's buried in proxy statements filed with the
In recent years, the nation's 8,100 public companies began giving investors a nonbinding "say-on-pay" vote on executive compensation. Now, those same companies also must divulge the pay ratio between their CEOs and their rank-and-file, dividing the top boss's earnings by those of the median employee -- the level at which half the company's workers make more and half make less.
Whether you're a Wal-Mart cashier, a
In 2016, a poll by the
A stark reality underlies that sense of inequity.
From 1978 to 2016, CEO compensation at the nation's 350 largest firms rose 937 percent, 70 percent faster than the stock market, according to the
In 2016, the nation's 350 biggest public companies paid their CEO an average of
CORPORATE PUSHBACK
When he was running for president,
But he added this: "It's very hard, if you have a free enterprise system, to do anything about that."
Corporate groups call the ratio rule a crude measure. Smaller technology firms with an educated workforce may have narrow ratios. Large retailers with many low-skilled part-timers, and manufacturers with numerous foreign employees, have wide gaps.
But regardless of the ratio,
Given fears over shareholder anger and plummeting worker morale, companies are expanding their public filings to explain some of the disparities.
Molina's median worker made
"All of our employees will benefit from the success of the turnaround
"The vast majority of his compensation is both performance-based and long-term in nature such that his interests are fully aligned with the interests of all our shareholders -- he wins only if they win."
Edwards LifeScience's proxy statement noted that sales grew 16 percent last year, adding that "89% of the total direct compensation of our CEO...was performance-based." The company's median employee made
Its median worker earned
The ratio rule is "kind of a dig" at CEOs, Havner said.
"Comparing what I do to the median employee is not even apples and oranges. It's more like fruit compared to Star Wars. They don't know how to allocate capital, and their educational level and skill set is vastly different.
"People have decisions to make as to whether they want to improve themselves and get higher paying jobs," Havner added. "Some people decide to do that and others don't."
LEGISLATORS WEIGH IN
But why don't rank and file employees share more in the wealth they help create?
That question is driving efforts in the
A bill sponsored by Sen.
The measure, SB 1398, would also hike the tax by 50 percent on firms that cut their
"We need to motivate good corporate behavior," Skinner said. "When companies pay minimum wage, or just above, then taxpayers foot the bill. Their workers' depend on food stamps,
In 2014, a similar measure gained a majority in the state senate but failed to reach the required two-thirds threshold for a tax increase. The
But Skinner sees Trump's recent tax law, projected to save corporations about
"Employees, not just CEOs, contribute to profits."
In March, Bloomberg estimated about 60 percent of the tax bill gains so far are going to investors, compared with 15 percent for employees. That is fueling growing demands for higher wages and a sharper focus on CEO pay ratios.
DISNEY SHAREHOLDERS REVOLT
The company also is in the crosshairs of both its unionized workforce and its shareholders over chief executive
At
That argument fell flat with a coalition of
The union coalition recently funded a study by
A
"
"I work very hard at my job to maintain quality," she said. "But I've had to go to food banks and sleep on a mattress in a living room to make ends meet. I recently had pneumonia, but I couldn't afford the
PARTISAN DIVIDE
Whether the ratio rule survives may depend on the 2018 mid-term elections, given that the focus on CEO pay is strongest among
After Trump's election,
And in June the
But investors pushed back.
The
"In many instances, there is no correlation between outsize CEO pay and the success of a corporation," said Angelides, the former
"I'm fascinated by the myth of the 'indispensable CEO,'" he added. "Legions of CEOs run public companies that have been around for decades. They're not entrepreneurs who create real wealth through genius. If one collapses on the golf course, hundreds of qualified people are around to take that job."
PAY FOR PERFORMANCE
A recent survey by the investment research firm
"More than 61% of the companies we studied showed poor alignment relative to their peers," the study concluded.
Moreover, CEO pay is often buoyed by a bull stock market, unrelated to the executive's actions, studies find. Stock prices are pumped up by financial engineering, such as share buy-backs, and boards of directors -- the people who approve compensation packages -- are typically stocked with friendly executives from other companies who tend to reward their peers. CEOs may be tempted to earn more by boosting short-term profits over long-term growth.
Public pension funds are most likely to vote against questionably high CEO pay packages, according to the annual "100 Most Overpaid CEOs" report issued by As You Sow, a non-profit shareholder advocacy group. But large mutual funds, such as
"Those who own mutual funds through 401ks and other investment vehicles must hold fund managers accountable," the report concludes.
"Back then, the CEO of a company like
But after the hostile takeovers of the 1980s -- when leveraged buyout firms would oust corporate leaders for sluggish stock growth -- the nature of CEO pay changed, becoming directly tied to stock price.
"The intentions were good, but compensation went haywire," Wiersema said.
Abuses proliferated, she added. Some companies that granted stock options to CEOs would then back date them or re-issue them when the price went down, offering the illusion of tying pay to stock performance but eliminating the risk.
Wiersema said she would like to see "more teeth" in the say-on-pay rule to make companies justify high CEO pay. Ratio disclosures won't have an impact, she predicted: "Just because a board takes money away from a CEO doesn't mean that money will be channeled to workers."
Nor does Wiersema favor tying taxes to ratios, as Skinner's bill would do.
A better strategy, she suggested, would be for governments to raise mandatory minimum wages. "It's ridiculous we taxpayers are subsidizing these companies' low labor costs. They should pay their employees better.
"And if it means a burger costs
FivePoint's Haddad led nation's homebuilders in CEO pay last year
Are top bosses overpaid?
State bill would partially tie tax rate to CEO pay
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