Posted on 06/27/2018 2:25:33 PM PDT by rickmichaels
A Walmart employee earning the company’s median salary of US$19,177 would have to work for more than a thousand years to earn the US$22.2 million that Doug McMillon, the company’s chief executive, was awarded in 2017.
At Live Nation Entertainment, the concert and ticketing company, an employee earning the median pay of US$24,406 would need to work for 2,893 years to earn the US$70.6 million that its chief executive, Michael Rapino, made last year.
And at Time Warner, where the median compensation is a relatively handsome US$75,217, an employee earning that much would still need to work for 651 years to earn the US$49 million that Jeffrey Bewkes, the chief executive, earned in just 12 months.
These stark illustrations of income inequality are revealed in the Equilar 200 Highest-Paid CEO Rankings, which are conducted annually for The New York Times by Equilar, an executive compensation consulting firm. As economic uncertainty roils the U.S., the gap between top executives and everyday employees grows ever wider.
This year, publicly traded corporations in the United States had to begin revealing their pay ratios — comparisons between the pay of their chief executive and the median compensation of other employees at the company. The results were predictably striking.
“It’s grotesque how unequal this has become,” said Louis Hyman, a business historian at Cornell University. “For CEOs, it’s like they are winning the lottery year after year. For a lot of Americans, they don’t have any savings. When they lose their job, they lose everything.”
Live Nation and Time Warner did not reply to requests for comment. Walmart said it was increasing wages for low-paid workers.
The pay ratio rule, part of the 2010 Dodd-Frank banking regulation law, has been left untouched by the effort to roll back parts of Dodd-Frank now making its way through Congress.
As glaring as the ratios may seem, they tell an incomplete story. Some companies reported very low ratios and relatively high median incomes but rely on outsourced labour for important tasks. Other companies that reported very high ratios employ many workers overseas where pay is far lower than in the United States. And not all companies have reported their pay ratios.
“As much as these numbers reveal, they also hide,” said Hyman, who in August will publish Temp, a book about gig workers and the proliferation of part-time labor. “It all depends on who you consider to be an employee in this new economy.”
For example, Mattel, the toy company, owns its factories overseas and employs thousands of low-paid workers in Asia. As a result, Mattel reported the second-highest ratio on the Equilar list: The chief executive’s pay was 4,987 times that of the median employee.
Contrast that with Incyte, a drugmaker with the lowest ratio on the Equilar list. The chief executive of Incyte made just 64 times what the median employee earned. But unlike Mattel, Incyte outsources its factory work, allowing it to keep its workforce small and its median pay high.
At least some compensation experts harbour a hopeful view that over time, sustained scrutiny of the income gap might lead to a more equitable distribution of wealth.
“This could have beneficial results about how companies communicate with their employees,” said Jannice Koors, an executive compensation consultant at Pearl Meyer. “In a good year, if the CEO’s pay goes up, does the median employee’s pay go up, too? Does the company have profit-sharing that goes deep enough into the organization that the median employee is getting equity grants?”
That may be wishful thinking, and critics of rising income inequality are quick to point out that sustained low wages can lead to reduced economic growth and marginalize large swaths of the population. Disposable income is needed for a healthy economy, and people need the time and resources to take care of themselves and their families.
“Particularly in low-wage jobs, people are struggling to pay for housing, for health insurance, for child care,” said Jennifer Gordon, a law professor at Fordham University. “When people are working two and three jobs and are not able to put together a decent wage, then at a very basic level they don’t have time to be active in their children’s schools, they don’t have the ability to engage in their local politics.”
And still, executive pay, already excessive in the eyes of many critics, rises.
For the first time, two chief executives on the list were awarded more than US$100 million each. Hock Tan of Broadcom received UA$103.2 million, while Frank Bisignano of First Data earned UA$102.2 million.
In 2017, the median pay for the 200 highest-paid chief executives was US$17.5 million, and they received an average raise of 14 per cent, compared with 9 per cent in 2016 and 5 per cent the year before that.
Among the 160 companies of that group that revealed pay ratios, the median compensation for chief executives was also US$17.5 million. In contrast, workers earned US$75,217, a decent salary in a country with a shrinking middle class but one that further demonstrates the growing gap between the C-suite and the typical employee. Equilar calculated that the median pay ratio disclosed by these companies was 275-to-1.
In defending these lavish awards, companies are quick to point out that much of this compensation is in stock, that many of the biggest awards represent long-term incentive plans and that, in some cases, the stock vests only if the company’s share price hits certain targets. As a result, they argue that the value of annual compensation packages can turn out to be much lower than initially stated.
That logic cuts both ways. If the stock does well, the total value of these compensation plans can be even greater than the large sums first reported.
In theory, such plans encourage chief executives to focus on creating value for shareholders. And at times, that pay seems to mirror the fortunes of the company. At Morgan Stanley, for example, shares were up about 20 per cent last year, while James P. Gorman, the company’s chief executive, received a 16 per cent pay rise.
“The design of executive compensation continues to emphasize shareholder alignment,” said Brian Blackwood, an executive compensation consultant at Willis Towers Watson. “When shareholders prosper, executives will benefit, and vice versa.”
It doesn’t always work out that way. Shares of TripAdvisor fell by roughly a third last year. Nonetheless, the company’s chief executive, Stephen Kaufer, was awarded a long-term incentive package worth some US$43.2 million.
And while chief executives are among the highest-paid people in the country — the country’s 200 chief executives on the Equilar list, almost all of them white men, were awarded some US$4.4 billion last year — they are not alone in enjoying lavish pay. Others who don’t hold that exact title also did well in 2017.
David T. Hamamoto, a former CEO who until January was the executive vice chairman of Colony Northstar, a real estate company, was awarded US$53 million last year. Larry Ellison, the founder, chairman and chief technology officer of Oracle, was awarded US$41.3 million, adding to his net worth of some US$57 billion.
Financiers at hedge funds, which are generally private and not included in the Equilar study, can earn billions of dollars a year. Michael Platt, the founder of BlueCrest Capital Management, earned US$2 billion last year, according to Forbes. James Simons, a founder of Renaissance Technologies, earned US$1.8 billion.
And two technology entrepreneurs who last year took their companies public were awarded generous pay packages but were not included on the list because they did not file proxy statements.
Evan Spiegel, a co-founder and the chief executive of Snap, received a stock award worth US$636.6 million in connection with the company’s initial public offering. And Dropbox co-founder and chief executive Drew Houston was awarded a performance-based grant worth about US$110 million.
“The top layer of management live like kings and queens while the people at the bottom are scrabbling for a decent existence,” Gordon said. “We should not have that in a society where equality and fairness supposedly matter.”
Go make yourself a CEO or millionaire....
Government grants them visas for foreign workers who under cut my fucking paycheck
“people are struggling to pay...for child care”
If mom makes $X, baby sitter will want at least $X too.
If mom makes $X+, baby sitter will want at least $X+ too.
If a care giver can only take care of three kids, child care is always going to eat up about half the pay of many moms with just one, because of child care business overhead, such as FICA taxation and liability insurance.
Little kids need lots of watching.
In my youth in the 1960’s, family structure normally was dad worked and mom stayed home and watched the kids.
The only mom I knew that worked was Mrs. Fitzgerald. She was a fairly well-paid secretary. She had kids older than me who could watch her kids. What she did before when she only had really young ones, I don’t know. Perhaps a grandparent watched the kids.
Class warfare! Class warfare! Class warfare! The rallying cry of Marxists for 150 years.
“For a lot of Americans, they don’t have any savings. When they lose their job, they lose everything.”
They don’t have any savings because Barack Obama, who was taught interest was evil in Muslim madrasas, put Yellin in charge of the Federal Reserve. She promptly killed interest rates and people’s interest in saving money.
The Democratic-created unemployment insurance system is also obviously defective.
My last Christmas with the company, while all the other department managers took their employees out to lunch, my manager brought in McDonald's breakfasts for all of us..............
An employee's salary is representative of their worth to the company and if only the managers receive the bonuses, that speaks volumes about the worth of the people who work for them who receive no bonuses........
It is interesting that the comparisons are made between corporate executives and entry level employees.
I wonder what the ratio of salaries is between
Major league baseball players and the people who work in the concession stands
The top paid entertainers and the brand new stage hands or ushers
The top rock stars and the people who set up the equipment.
It’s been my experience in the 30 some odd years I have been working full time that people who complain about wealth disparity typically either made bad career choices, simply did not want to do what it takes, or just were not capable
One of the problems is that law has become very complex.
Only a limited number of people have the skill to guide a company through vast webs of laws and regulations and have business and people skills too.
These people become artificially expensive.
And big companies hire young people and others who they can pay less to undercut our business all the time.
We adapt and find ways to remain competitive by innovating or offering superior services.
Walmart employs 2.1 million people world wide.
Doug McMillian earned $22.2 million last year.
IF... the AVERAGE employee worked 20 hours a week, 50 weeks a year, that equals 1,000 hours a year average.
Multiply 1000 hours by 2.1 million people,
That’s 2.1 BILLION man hours worked
that’s about 1 cent an hour from all employees
Not enough to affect anyones pay.
Meanwhile,
McMillan oversees 11,695 stores worldwide
and makes decisions that affect 2.1 million people.
“Major league baseball players...top paid entertainers...top rock stars”
CEOs are business stars.
If leftist cities didn’t subside ballparks, athletes would have been paid less and so would CEOs.
Imagine if a couple got paid $65 million for writing some books or $50 million for hosting TV shows.
Imagine giving speeches for a few years and getting $100 million.
Would leftists object?
This is where I part ways with a lot of conservatives. I don’t trust big business. I have seen to many of them willing to sell out their workers, their company, and America to make a buck.
I know it’s anecdotal evidence but a friend of mine invited me to a luncheon for some local business leaders in our community. He himself is 2nd in charge of a medium size company in the area. I just sat back and listened and the impression that I got from these people is they would be happy with having company towns and company stores again.
But I struggle with what the answer is. I believe that capitalism is the best economic system but it has to have some controls on it.
Says you with your glorious 30 year history of doing better than others thru you superior talent and effort. I’ve made money, and lost money,had good jobs and not so good jobs and even ran my own business. Unlike you I don’t look down or judge people who are not as well off as I. Unlike you I honor honest labor and believe there is something terribly wrong when a person who works sometimes 2 or more jobs can’t get by under the current worldly system.
CEO Compensation is an issue for the Stockholders to worry about, not the rank and file Employees.
Envy is an issue for the Democrats nd Unions to promote.
Excellent point! I am renting a car at the Minneapolis airport in a couple of weeks. The rental for the car is about 350-400 dollars per week. The taxes and add on fees are about 150 dollars, I am sure some of those taxes are to
finance the various stadiums.
How many Hours would a Chinese Worker assembling iPhones have to work to make as much as Apple’s CEO?
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