The wage gap between Chief Executive Officers of big corporations and median employee pay widened in 2020 amid the coronavirus pandemic, according to AFL-CIO’s annual Executive Paywatch report.
The report shows that average S&P 500 company CEO made 299 times the average worker’s salary last year. Executives received $15.5 million in total compensation on average – an increase of more than $260,000 per year over the past ten years.
The highest-compensated CEO in 2020 was Chad Richison of Paycom, who received more than $200 million in salary and stock awards.
Among the highest-paid CEOs in other companies include General Electric, Regeneron Pharmaceuticals, Hilton, T-Mobile, Nike, Microsoft and Netflix, according to the report.
Meanwhile, the average production and nonsupervisory worker in 2020 earned $43,512, up just $957 a year over the past ten years.
Both average compensation and pay ratios grew in 2020 during the pandemic. Executives’ average total compensation increased more than $700,000 while CEO-to-worker pay ratios increased from 264:1 in 2019.
“This is consistent with what we’ve been seeing year to year,” Liz Schuler, AFL-CIO secretary-treasurer, said in a press conference with reporters on Wednesday.
“Inequality, the imbalance in our economy, is clear by this report that the pay of CEOs and working people continues to be a major problem in this country.”
A regular analysis of CEO-to-worker pay is important, Aflcio says. A higher pay ratio could be a sign that companies suffer from a winner-take-all philosophy where executives reap the lion’s share of compensation. A lower pay ratio could indicate the companies that are dedicated to creating high-wage jobs and investing in their employees for the company’s long-term health.
The most skewed pay scale belonged to Aptiv, which had a 5,294:1 CEO-to-worker pay ratio last year. While the company’s CEO, Kevin Clark, was compensated with more than $31 million in 2020, its median employee pay was $5,906.
Other companies topping that list include The Gap, Paycom, Chipotle, Hilton, Nike and Coca-Cola.
Companies in the consumer discretionary industry, including retailers like Amazon, had the highest disparity with an average 741:1 CEO-to-worker ratio.
“The only reason we’re reaching the other side of the Covid-19 pandemic is because working people stepped up,” Schuler said. “We hear so many business leaders calling these workers essential and calling them heroes, but words are not enough. We have always been essential, doing the critical work to make this country hum.”
Morgan Stanley CEO James Gorman was the highest-paid bank chief executive in the United States in 2020 after a 22% increase in his total pay compared to 2019. Gorman earned a total of $33 million last year, according to the bank’s regulatory filing.
The widening gap between the CEOs pay at big corporations and other employees pay has been a topic of interest since the 2008 financial crisis when federal officials mandated that companies publicly disclose that data.
Last year, many CEOs and top executives of big corporations announced at the start of the pandemic they would be taking a pay cut or completely foregoing their salaries.
Although the move was viewed as symbolic and necessary to show workers that the CEOs were impacted by the pandemic, too. But taking a pay cut or foregoing salaries doesn’t seem to be enough to engender drastic improvements for lower-paid employees or make up for pandemic losses.
Giving up pay may not mean big losses for the executives at the big corporations since base pay is only a fraction of an executive’s total compensation, which is usually comprised of performance-based compensation such as stocks, options and bonuses.
Despite a slight decrease in some of the CEOs base pay last year, they still enjoyed huge increases in their equity compensation, especially in stock-based pay, which increased over $1 million.
For example, while the average CEO salary at S&P 500 companies was a little more than $1 million, performance-based compensation accounted for an additional $14 million, bringing the average total compensation to more than $15 million last year.
On average, CEOs of S&P 500 companies saw their total compensation grow 5% last year while the disclosed median employee pay grew only 1% at those same companies.