A newly approved rule means that in a couple of years, we’ll have more information about the pay gap between CEOs and workers.
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But before this starts, the Glassdoor Economic Research team analyzed S&P 500 companies to compare what their CEOs earn in total compensation versus median total compensation for employees.
In other words, the average CEO earns around 204 times what their median worker earns, explains Andrew Chamberlain, Glassdoor’s chief economist, in a blog post. “But all of them suffer from a basic problem: CEO compensation is widely available for public companies, but information about average worker pay is not, making it hard to accurately report the ratio of CEO pay to average worker pay”. Yahoo Inc. CEO Marissa Mayer earns 307 times the Yahoo median employee pay, taking in about $42 million. Whereas CEO pay is reported in SEC filings precisely, staff who’re self-reporting revenue are likely to underestimate their pay as they could omit inventory choices or fail to recall non-salary compensation, the employment website stated.
Facebook had the fourth lowest ratio: 4.
Rounding out the top five with the highest pay ratios are CVS Health (Larry J. Merlo, pay ratio of 1,192); Walmart (Douglas McMillon, pay ratio of 1,133), and Target (Brian C. Cornell, pay ratio of 939). Chipotle is No. 2 with a ratio of 1,522: CEO Steve Ellis was paid $28.9 million and median worker pay is $19,000. “We feel pretty confident that this is a good estimate of median pay for workers”, he says. While Glassdoor used SEC proxy statement filings to determine CEO compensation information, which is publicly disclosed, the company relied on its employee surveys to calculate total compensation for employees.
Oracle’s ratio: 573. Then-CEO Larry Ellison was paid $67.3 million, while median worker pay was $117, 415.
Still, Chamberlain says that while they are clear they may not have a full distribution of job titles, its figures offer a reliable estimate, especially with these caveats in mind.
DATA: Glassdoor. The first 27 companies in the ranking of CEO-to-worker pay ratios, calculated using salary surveys submitted to Glassdoor’s site.
“Executive pay has always been controversial, “writes Chamberlain.”In recent years, a number of studies have highlighted the gap between CEO pay and average salaries for workers”. Mr. Kartsotis is one of the initial investors in our company and expressed his belief that his primary compensation is met by continuing to drive stock price growth”.
Glassdoor’s report comes as more investors grumble about executive pay.
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“Beginning in 2017, public companies will be required to disclose the ratio of CEO pay to median worker pay, providing transparency into pay inside some of the largest companies – all the way up to the top”. The Mercury News reported last month in its annual What the Boss Makes survey that shareholders are keeping the pressure on, and some companies are listening. Only companies for which Glassdoor had 30 or more worker salary reports were included. The rule will take effect in 2017.
