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Not all CEOs' pay dwarfs their employees' median salary

August 16, 2018
Borderless Leadership

There has been a lot of uproar over CEOs’ exorbitant pay in comparison to employees’, which companies are now required to report. But very little attention has been paid to the flip side: CEOs whose salaries are much less out of kilter with those of their workers.

The salary comparisons are being disclosed in order to comply with a Securities and Exchange Commission edict that took effect for this year’s proxy season: a reporting of CEOs’ pay and median salaries for their employees, creating an assessment that is known as the CEO Pay Ratio. The reporting was required for public companies whose fiscal years started on or after Jan. 1, 2017, parameters that encompass most publicly traded companies.

Consider Warren Buffett. The CEO of Berkshire Hathaway had the smallest ratio among Standard & Poor’s 500 companies, at 2:1. Buffett takes $100,000 in pay annually and the median pay for his employees is $53,510, found howmuch.net, which tracks matters related to money.

To be sure, Buffett is a billionaire many times over and doesn’t need to be incentivized to do a good job. But other CEOs had relatively narrow margins.

The second smallest ratio was 4:1 at Kinder Morgan, where Steven Kean was paid $382,000 to the average worker’s $104,000. Next up was JB Hunt Transport Services, with a 15:1 ratio, given workers’ median pay of $57,384.

At Salesforce.com, the ratio was 30:1, with Marc Benioff receiving $4.7 million to workers’ median pay of $155,284. Intuitive Surgical had a 32:1 ratio, with Gary Guthart, Ph.D., receiving $5 million to workers’ median of $157,491.

High-profile companies with ratios on the lower end included Facebook, with a 37:1 ratio. Mark Zuckerberg was paid $8.9 million, while the average worker earned $240,430. Dish Network had a 33:1 ratio, with a median salary of $46,778 compared to Charles Ergen’s $2.4 million.

Granted, many CEOs still take down hefty salaries, and at many companies this causes a huge disparity with the pay their employees receive. A study of 356 companies by Equilar showed that the median CEO pay ratio across all S&P 500 companies was 140:1.

Astronomical differences
But the ratios go much, much higher, according to research by Equilar and Vox. Mattel CEO Margo Georgiadis made 4,987 times the median pay of her employees. She was paid $31.3 million last year, which was her first year on the job, while the median salary was $6,271. Mattel does most of its manufacturing overseas, where, in general, pay is considerably lower than in the U.S.

Greg Creed of Yum Brands, which owns KFC, Pizza Hut and Taco Bell, was paid 1,358 times more than the median salary. His pay was $12.4 million, compared with the median pay of $9,111.

Aptiv PLC, an auto parts technology business, had a ratio of 2,526:1, based on employees’ annual total compensation of $5,464 and its CEO’s annual compensation of $13.8 million.

Kohl’s margin was 1,264:1. The CEO’s total compensation for 2017 was $11.3 million and the median salary was $8,975.

McDonald’s had a ratio of 3,101, with Stephen Easterbrook receiving $21.8 million, while workers’ median pay is $7,017.

Additionally, PayScale reported on well-known names like CVS Health and its 434:1 ratio based on Larry Merlo’s $12 million salary and the median salary of $27,900.

CBS had a ratio of 395:1, given Leslie Moonves’ $23.6 million pay and the $59,900 median salary.

And Walt Disney’s ratio was 367:1, with Robert Iger paid $26.2 million and employees receiving median pay of $71,400.

By Karen Talley

Source: Fierce CEO

 

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