Top executives at U.S. public companies made an average of $14.8 million last year, 264 times their employees' earnings, a gap that will widen dramatically this year because of the pandemic, the AFL-CIO said Wednesday.
In its Executive Paywatch report, the nation's largest labor federation said CEOs at companies listed on the benchmark S&P 500 index saw their compensation increase by about $300,000 from 2018. While the pay gap with ordinary workers narrowed slightly in 2019 from the previous year, that gain will be short-lived because of the more than 30 million workers who have lost their jobs this year.
“The disparity is horrific and it represents a fundamental imbalance in our economy,” AFL-CIO Secretary-Treasurer Liz Shuler said during a press conference this morning. "It exposes massive inequality."
The largest pay disparity recorded on the S&P was at auto parts company Aptiv, with a ratio of 2,077 to 1. The next four highest were McDonald's Corp., apparel and footwear company VF Corp., Starbucks and the Coca-Cola Co.
Many of the largest disparities came from companies in retail, with the largest reported gap at Abercrombie & Fitch, where the pay ratio was 4,293 to 1.
Shuler said announcements about CEOs taking cuts to their cash salaries during the pandemic — including at Abercrombie — obscure other compensation such as in company stock that could lead to even larger disparities in future years.
When Abercrombie announced worker furloughs in April, the company said CEO Fran Horowitz took a salary cut. But two weeks earlier, she received 240,000 shares of restricted stock, the report said, an award that appreciated dramatically as the company's stock price has recovered by 20 percent since March lows.
"We saw these exact same CEO pay shenanigans after the 2008 Wall Street financial crisis, so this is very familiar territory," Shuler said.
The AFL-CIO produced the $14.8 million average CEO compensation figure using public company disclosures on employee pay and pay ratios disclosed in proxy statements that were available from 498 companies in the S&P 500 index, though not all companies had both of those data points, according to the group’s methodology posted online. Pay ratios include employees outside the U.S. for large multinational companies.
In the report, the group compares the average CEO compensation number with annual earnings of $41,442 for the “average production and nonsupervisory worker” in the U.S.
Brandon Rees, the AFL-CIO’s deputy director of Corporations and Capital Markets, said that figure comes from a 2019 Bureau of Labor Statistics estimate.