Economics Inequality

Economic Policy Institute: CEO Pay Rose by 16% in Last Year, While Worker Pay Rose by 1.8%

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The Economic Policy Institute unabashedly advocates for workers and unions and publishes accurate data about inequality. It recently revealed that CEO pay rose by 16% between 2019 and 2020, while the average worker saw a pay increase of only 1.8%.

In 1950, the average CEO was paid twenty times the wages of the average worker.

By 2019, the average CEO was paid 320 times as much as the average worker.

In some companies, the CEO is paid 1,000 times more than the average worker in that company.

Bloomberg.com reported on the CEO-worker pay gap, in an article titled “Is a CEO Worth 1,000 Times the Median Worker?”

Chipotle recently became the latest company to voluntarily raise worker pay, announcing that many of its 76,000 hourly employees would get a bump to $15 an hour. This occurred shortly after the company disclosed that CEO Brian Niccol had made nearly 3,000 times the median employee salary in 2020, up from 1,136 times in 2019 and among the top ten highest pay ratios among companies in the Russell 3000 stock index, according to research firm Equilar.

Coincidence? Or is the pay bump for the rank and file a sign that the most highly compensated senior executives are starting to feel a tinge of shame? 

For the past four years, the Securities and Exchange Commission has required publicly traded companies to disclose something called the CEO pay ratio — the amount the CEO receives in relation to the annual salary of the median employee. At many companies, especially large companies with thousands of low paid workers (think retailers, restaurants and tourism), it’s not uncommon to see a number like Niccol’s, with the CEO making more than a thousand times the salary of the median employee. According to Equilar, there are 57 such companies in the Russell 3000. Auto-parts company Aptiv PLC topped the list: CEO Kevin P. Clark’s total 2020 compensation of $31 million was more than 5,000 times that of its median employee, who made less than $6,000, according to Aptiv’s proxy.

The mere disclosure of the pay ratio is something of an achievement in itself, given how red-hot an issue compensation remains. The SEC took five years to write and nearly eight years to implement the rule, which was part of the Dodd-Frank legislation that then-President Barack Obama signed into law in July 2010. It has yet to complete rules on four other compensation-related topics, which were clearly not a priority under former SEC Chairman Jay Clayton. When the pay-ratio rule was first proposed in 2013, it attracted nearly 200,000 comments. It should come as no surprise that the overwhelming majority of companies were opposed, citing complicated business operations and unreasonable costs, while shareholder advocates and investors were eager to see the ratio disclosed.

Open the article to see the list of companies where the CEO: worker pay was largest.

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