Glassdoor recently set out to find the average ratio of CEO pay to median worker pay at some of the biggest companies in the US.
To do that, the team first sifted through 2014 Fortune 500 SEC filings to find out how much the CEO at each company earns in a year. They then found the median employee compensation for workers at each company, and did some simple maths to calculate the average ratio. (To ensure statistical reliability, Glassdoor only included companies with at least 30 salary reports from employees.)
They found that across all Fortune 500 companies, the average CEO pay was $US13.8 million a year, while the average median worker pay was about $US77,800 and the average ratio of CEO pay to median worker pay was 204.
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.
Here are the 26 companies with a ratio that exceeds 500:
“Executive pay has long been controversial,” writes Chamberlain. “In recent years, a number of studies have highlighted the gap between CEO pay and average salaries for workers.” However, new rules adopted by the Securities and Exchange Commission (SEC) this month “mean all that is about to change,” he explains.
“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.”
In the meantime, CEOs of companies like Wal-Mart and Chipotle are earning about 1,133 and 1,522 times what their employees make, respectively, according to Glassdoor research.
Chamberlain says it’s important to note that CEO compensation is highly volatile from year to year. “Most CEO pay at large companies is made up of bonuses and stock compensation that swing sharply from year to year. Choosing different base years for our analysis would have a large effect on the rankings of CEO to worker pay for these employers,” he explained in his post.
He also says to make a fair comparison, Glassdoor compared total CEO pay to total worker pay. “However, while CEO pay for bonuses, stock options, and other pay beyond base salary is accurately reported in SEC filings, most workers underreport bonuses and stock options in surveys, such as Glassdoor’s salary survey. Most workers simply don’t know or don’t recall the details of non-salary compensation. As a result, total pay is likely underreported for workers, which could overstate CEO pay ratios.”
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