CEO pay is more out of whack than ever

Top execs in the US earn an average of 204 times more than their rank-and-file employees -- and that's a conservative estimate.

By Jason Notte May 1, 2013 7:23AM

CEO holding money and cigar, copyright Roy McMahon, CorbisWhat does it take to get business-minded Bloomberg and the employee-aligned AFL-CIO to agree on something? An exponential increase in executive pay, apparently.


Bloomberg reported Monday that the ratio of CEO-to-worker pay has increased 1,000% since 1950. Today's Fortune 500 CEOs make 204 times more than regular workers on average, up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950. The AFL-CIO has only a minor quibble with that ratio, insisting that the 2012 figure is closer to 354-to-1.


In each case, both Bloomberg and the unions agree that the balance of executive pay to worker compensation can be far more skewed, depending on which company is under the microscope. Bloomberg notes that recently departed J.C. Penney (JCP) CEO Ron Johnson was given a package worth 1,795 times the average wages and benefits of a U.S. department store worker when he was hired in 2011.


The workers who held the nearly 43,000 J.C. Penney jobs cut under Johnson's watch last year made roughly $8.30 an hour.


This isn't exactly an anomaly in the retail world, either. Salary information website PayScale determined in March that Wal-Mart (WMT) CEO Mike Duke makes 1,034 times more money than the average Wal-Mart worker. Target (TGT) chief Gregg Steinhafel brings in 597 times what the average Target employee makes.


Elsewhere, former McDonald's (MCD) CEO Jim Skinner ended his tenure last year making 434 times more than the average counter employee. Oh, and Disney (DIS) head Bob Iger, whose company is fighting to avoid giving its Florida employees sick days, makes 557 times more than the workers Walt Disney World is not so subtly telling to tough it out.


As The Guardian noted, American CEOs saw their pay jump 15% in 2011 after climbing 28% the year before. Not only did worker wages drop 2% in 2011, according to the Labor Department, but the Economic Policy Institute says CEO pay leaped 725% from 1978 to 2011 while worker pay rose just 5.7%. As The Huffington Post points out, CEOs continue to see their pay climb at three times the rate of those they employ.


The Dodd-Frank financial reform law passed nearly three years ago included a provision requiring public companies to disclose their CEO-to-worker pay ratios. While some of the above information dribbled out, Bloomberg notes that the Washington-based HR Policy Association lobbying group has been pushing back against such disclosures. While unions insist it's a vital step toward fixing pay disparity and business groups note that it's information that shareholders of public companies should have access to, HR Policy's board of directors disagrees.


Of course, that board includes companies with CEO pay ratios in the top 20% of S&P 500 companies. General Electric (GE), with its 491-to-1 ratio, and AT&T (T), at 339-to-1, have seats on the group's board. When you've just shoveled a whole lot of money into your vault, why just hand your investors and employees the keys?


More on moneyNOW

May 1, 2013 9:27AM
And in the meantime, they keep cutting the pay of their employees.  Makes me sick.
May 1, 2013 9:32AM
No wonder the economy is so slow to recover, all the money is at the top so companies are running out of customers...
May 1, 2013 8:41AM
And not one of them worth it. It is obscene. What happened to incentive and results?
May 1, 2013 9:55AM
This country needs a revolt.  Way overdue.
May 1, 2013 9:38AM
And then these very companies balk at providing decent wages and healthcare for their workers. Most of them earning bonuses for basically running their companies into the ground, or outsourcing to China or India. The Teapublicans just keep doing things that make the Democrats seem like the lesser of two evils.
May 1, 2013 9:44AM

This is the driving force of our recession, the disparity of income between the 1% and the disappearing middle class.


Upper management should only accept the same annual percentage increase as they are willing to provide to the rank and file (the folks who actually add value to a product or service) of that company.


May 1, 2013 9:43AM

This is the Republican trickled down theory of economics at its best, give those at the top more and those at the bottom less.  Now cut the employees hours so the don't have to pay for health care or other benefits so they can put more and more into their pockets. 


If the emplooyees of the world just have enought to eke out a living and get by who is it that's going to buy the products that keep our economy moving? 

May 1, 2013 9:46AM
No wonder Corporations can't afford healthcare, they are too busy wining and dining the top elites.
May 1, 2013 7:52AM
Actually the figure is far closer to 400 to 1 when you consider all the advantages and Payouts of being at the top as opposed to those in the middle or at the bottom.
May 1, 2013 9:54AM
It is a disgrace the salaries, bonuses, etc. these CEO's get.  Honestly, most of them do not know much more than anyone else but they come in promising big results and most usually back fire.  Just look at the recent JC Penny CEO and the mess he created in the short time he was there.  Now they got the old CEO back & using the business philosophy  that kept JC Penny's afloat.  Hopefully for Penny's they can be saved before they go under due to terrible mismanagement by the last CEO.  I myself have seen it first hand at companies i worked for when they hire these big CEO's who cost the company millions & basically they take away from the "workers" to support these worthless, greedy, bastards who don't give a crap about anything & leave with more money than what they came in with.  I guess it's a good gig if you can get it.
May 1, 2013 9:55AM
The JC Peeny guy made $15,000 and hour? Let me have his job for one day, that's all I ask. I'm sure the company would be no worse off after that day.
May 1, 2013 9:53AM
History is replete with events stemming from disparities in living conditions ignored by those whose only focus is on their own well-being.  The 'let them eat cake' response usually ends up badly for those who express it.
May 1, 2013 9:46AM
And the world wonder why there is no money big time CEO,s ripping off the people high dollar sport players,music and movies they all are crooks the seed of greed has took it,s course but as always we blame the president  what a joke welcome to the new world order of crooks
May 1, 2013 9:52AM
The CEOs are riding in Bentleys being pulled by their employees.
May 1, 2013 10:20AM
The only CEO's that earn their money is Ben and Jerry's CEO's, the reason is the 5 to 1 ratio that the company has and continues to use for wages.  What that means is the highest paid employee can earn no more than 5 times the wages of the least paid employee.  That is why that company thrives year after year.
May 1, 2013 9:44AM
According to Jesus, a rich man's chances of getting into Heaven are the same as that of a camel passing through an eye of a needle, so obviously CEO's will be going to Hell.
May 1, 2013 9:30AM
What about professional athletes?  The top 100 make from 85 million (Floyd Mayweather) at the top to 16.5 million (Jake Peavy) as #100, salary and endorsements combined. They don't provide jobs and don't eliminate them either.
May 1, 2013 9:44AM

You have to be willing to pay top dollar or other companies will beat you out for executives like Ron Johnson.  Gotta have the best if you want to completely ruin your company.

May 1, 2013 9:57AM
must be great to be a lier and a thief
May 1, 2013 10:32AM
These are the same guys saying Obamacare will force them to lay off people. How about just a little pay cut your highness?
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] The stock market finished the Tuesday session on the defensive after spending the entire day in a steady retreat. The S&P 500 (-0.6%) posted its third consecutive decline, while the small-cap Russell 2000 (-0.9%) slipped behind the broader market during afternoon action.

Equity indices were pressured from the start following some overnight developments that weighed on sentiment. The market tried to overcome the early weakness, but could not stage a sustained rebound, ... More