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The average CEO of an S&P 500 company earned 299 times the average salary of a worker last year, according to the AFL-CIO’s annual Executive Paywatch report. Executives have received an average of $ 15.5 million in total compensation, which represents an increase of over $ 260,000 per year over the past decade. At the same time, the average production and non-supervisor worker in 2020 earned $ 43,512, up from just $ 957 per year over the past decade.
Average pay and pay ratios both increased in 2020 during the pandemic. Average total executive compensation increased by over $ 700,000 last year, while CEO-to-employee compensation ratios rose from 264: 1 in 2019.
“This is consistent with what we’ve seen year after year,” AFL-CIO secretary-treasurer Liz Schuler said at a press conference with reporters on Wednesday. “Inequality, the imbalance in our economy, makes it clear in this report that compensation for CEOs and workers continues to be a major issue in this country.
The highest paid CEO in 2020 was Chad Richison of Paycom (PAYC), who has received over $ 200 million in wages and shares that vest over time. Other companies whose executives top the list of highest paid CEOs include General Electric (GIVE), Regeneron Pharmaceuticals (RAIN), Hilton (SDJ), T Mobile (TMUS), Nike (OF), Microsoft (MSFT) and Netflix (NFLX).
The most asymmetrical salary scale belonged to active (APTV), which had a CEO / employee pay ratio of 5,294: 1 last year. While the company’s CEO, Kevin Clark, was paid more than $ 31 million in 2020, the median salary of his employees was $ 5,906.
Other companies at the top of the list include The hole (GPS), Paycom, Chipotle (GCM), Hilton, Nike and Coke (KO).
Companies in the consumer discretionary sector, including retailers like Amazon, exhibited the greatest disparity with an average CEO-to-employee ratio of 741: 1.
“The only reason we’re reaching the other side of the Covid-19 pandemic is because the workers have stepped up,” Schuler said. “We hear so many business leaders calling these essential workers and calling them heroes, but words are not enough. We have always been essential, doing the essential work to make this country vibrate.”
A conversation in progress
There has been growing interest in the difference between executive pay and other workers at large companies since the 2008 recession, when federal officials asked companies to publicly disclose this data.
At the start of the coronavirus pandemic last year, many CEOs and top executives announced they would either take a pay cut or give up their pay altogether. In large companies, the decision to give up part of the pay was not enough to bring about drastic improvements for the lowest paid employees or to compensate for the losses linked to the pandemic, but it was symbolic and necessary to show workers and managers were also affected by the crisis.
The abandonment of compensation may not have resulted in big losses for executives either. Base salary is only a fraction of a senior executive’s total compensation, which typically consists of performance-based compensation such as stocks, options, and bonuses.
Despite a slight decrease in CEO base compensation, CEOs have benefited from increases in their stock-based compensation, particularly stock-based compensation, which increased by more than $ 1 million last year .
For example, while the average salary of CEOs of S&P 500 companies was just over $ 1 million, performance-based compensation was an additional $ 14 million, bringing the average total compensation to over $ 15. million dollars last year.
On average, CEOs of S&P 500 companies saw their total compensation increase by 5% in 2020, while the disclosed median compensation of employees only increased by 1% in those same companies.
The context
The growing difference between CEO and worker pay comes after a year of economic turmoil and in the midst of an economic recovery.
Last month, the US economy created 850,000 jobs, a number that exceeded expectations and signaled that job growth is accelerating. Yet the labor market is down 6.8 million jobs since February 2020, and 6.2 million people have not worked or worked less because their employer has been affected by the pandemic, according to the report.
Unemployment rates for demographic groups also show that the economic hardships of the pandemic are still mostly borne by low-income workers and non-white workers.
At the same time, America is struggling with record inflation. The consumer price index, a key measure of inflation, rose 0.9% in June, the largest month-on-month increase in 13 years. Over the past year, prices have risen 5.4%, the largest annual increase in inflation in nearly 13 years. The trend is crushing consumers as they struggle to keep up with rising prices, especially gasoline and food prices.
And, like job growth and inflation, the stock market is also reaching record highs. The biggest banks on Wall Street are reporting multibillion profits, and a number of top companies have already debuted on the stock market this year.
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