New This Year: Companies Must Disclose CEO’s Pay Compared to Company’s Median Employee Pay
Average CEO pay for major U.S. companies has risen more than 6%, as income inequality and outsourcing of good-paying American jobs have increased. According to the new AFL-CIO Executive Paywatch, the average CEO of an S&P 500 Index company made $13.94 million in 2017—361 times more money than the average rank-and-file worker.
The Executive Paywatch website, the most comprehensive searchable online database tracking CEO pay, showed that in 2017, the average production and nonsupervisory worker earned some $38,613 per year. When adjusted for inflation, the average wage has remained stagnant for more than 50 years.
“This year’s report provides further proof of America’s income inequality crisis,” said AFL-CIO Secretary-Treasurer Liz Shuler. “Too many working people are struggling to get by, to afford the basics, to save for college, to retire with dignity, while CEOs are paying themselves more and more. Our economy works best when consumers have money to spend. That means raising wages for workers and reining in out-of-control executive pay.”
For the first time, companies must disclose the ratio of their own CEO’s pay to the pay of the company’s median employee. The AFL-CIO’s newly updated Executive Paywatch website now includes company-specific pay ratio data and median worker pay, in addition to CEO pay levels. Pay ratio disclosure provides important information about companies’ compensation strategies and allows shareholders to determine whether CEO pay is out of balance in comparison to what a company pays its workers.
Mondelēz International continues to represent one of the most egregious examples of CEO-to-worker pay inequality. The company, which makes Nabisco products, including Oreos, Chips Ahoy and Ritz Crackers, is leading the race to the bottom and continuing to embrace inequality. In its SEC disclosure, Mondelēz lists former CEO Irene Rosenfeld who received $17.3 million in 2017, 403 times its median employee’s pay. Mondelēz also had a new CEO start in 2017. Dirk Van de Put made more than $42.4 million in total compensation in 2017—more than 989 times the company’s median employee pay. Last week, a majority of Mondelēz shareholders voted against the company’s advisory vote on executive compensation.
The toy-maker Mattel had the highest pay ratio of any S&P 500 company. Mattel’s median employee is a manufacturing worker in Malaysia who made $6,271, resulting in a CEO-to-employee pay ratio of 4,987:1. Warren Buffett’s company Berkshire Hathaway Inc. had the lowest pay ratio of all S&P 500 companies, just 2:1.