CEO-to-Worker Pay Ratio Now at 320 to 1
The average compensation package for a top executive in the U.S. is obscene. According to the Economic Policy Institute (EPI), it is only getting worse.
EPI reports that CEO earnings soared in 2019 and, despite the coronavirus recession, are poised to rise again in 2020 as millions of workers are laid off or had hours and pay cut.
CEO compensation rose 1,167 percent between 1978 and 2019. Meanwhile, the typical workers’ compensation for the same time period rose by 13.7 percent. At the 350 largest companies in the U.S., the CEO-to-worker pay ratio is at 320 to 1. That’s up from 293 to 1 in 2018. For some comparison, the pay ratio was 61 to 1 in 1989.
While some CEOs have made headlines crowing about how they’re slashing their salary, they don’t mention that their salary is a relatively small percentage of their overall compensation.
“Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with,” according to the EPI report. “CEOs are getting more because of their power to set pay—and because so much of their pay (about three-fourths) is stock-related, not because they are increasing productivity or possess specific, high-demand skills.”
Several Teamster employers have been guilty of such a pay disparity, not the least of which is XPO Logistics, where CEO Bradley Jacobs’ estimated pay exceeds workers’ pay by 237 to 1. In reality, however, the gap is far greater once the ultimate value of his long-term incentive awards are taken into account.
In May, the Teamsters sent a letter to XPO investors urging shareholders to vote against the excessive pay given to Jacobs, citing among other things, the more than $60 million in cash Jacobs received under an existing long-term incentive award. Despite a subsequent investor revolt over pay, just last month, Jacobs received a new long-term award that could pay out up to $80 million in cash. The stark pay gap between frontline workers and XPO management is not new for the company, and XPO has had to defend numerous class-action lawsuits related to employee wages and misclassification of workers over the last decade.
At Republic Services Group, CEO Donald Slager’s pay is 197 times higher than the average worker; and at UNFI, CEO Steven Spinner earns 140 times the company’s median worker.
When lawmakers rolled out the Tax Excessive CEO Pay Act last year, the Teamsters Union adamantly supported the legislation which would impose tax rate increases on companies with CEO-to-median-worker pay rates greater than 50-to-1.
“If companies can pay their top executives tens of millions of dollars, they can afford to raise wages for workers,” said Jim Hoffa, Teamsters General President. “Right now, workers are giving everything they have to keep us safe and keep the American economy rolling. It’s past time for the highest paid executives to make amends.”