RALEIGH – Chief executive officers at public companies ranking in the S&P 500 index earn on average 287 times that of their employee salaries’ median average – and in North Carolina seven firms pay higher or right at that rate.
A new study from Economic Policy Institute out this week found similar results. Reports CNBC: Since 1978, “CEO compensation rose 1,007.5% for CEOs, compared to 11.9% for average workers.”
Three tech companies – LabCorp, LendingTree and CommScope – paid their top executives total compensation packages, such as salary and stock options, to rank among the top seven.
VF Corp tops the list at a 1.767-1 ratio vs. the median worker pay of $10,099.
Also in the top seven are Handsbrands, Lowe’s and Advance Auto Parts.
The news comes as a new survey from staffing firm Robert Half finds that many CEOs are worried about retaining workers and four in 10 employees are thinking about looking for another job. Of those, nearly half want more money to stay.
The figures [see chart] are based on filings with the Securities and Exchange Commission that are required by federal law and for the first time includes all S&P 500 members, according to the union AFL-CIO, which compiled the data.
Biggest tech sector difference came at CommScope, which recently acquired one of its largest rivals. The firm paid its CEO Marvin Edwards a package totaling $1 3million, or 688 times that of median employee pay.
LendingTree’s CEO and founder Doug Lebda actually is the state’s highest paid executive, the data shows. But his package is at a lower ratio, 388 to 1, than CommScope with median LendingTree pay coming in at $109,139.
Lebda earned $42,318,238 in total compensation.
David King, LabCorp’s top exec and chair, earns 284 times more than the average employee salary of $43,230.
Steven Rendle was named CEO at VF Corp in 2017. He earned a package worth more than $17 million.
Overall, the smallest difference in CEO-to-employee compensation ratio came at Select Bancorp: 8-to-1 difference where average pay is $58,789.
Why such a big difference?
“The CEO-average work pay gap has long been an issue, and the gap has become larger in recent decades,” NCSU economist Dr. Mike Walden told WRAL TechWire.
“The best logical explanation for the growing gap is the greater perceived worth by companies of having a top-flight CEO.”
Raleigh attorney Jim Verdonik of Innovate Capital Law who has considerable expertise in securities law and working with firms small to large, cautions that the data alone doesn’t tell the entire story of CEO compensation.
“Of course, the AFL-CIO who published these statistics, is in the business of trying to increase wages. So, they use their statistics to buttress their arguments,” Verdonik says.
“No harm in that. We should just be aware that the numbers don’t speak for themselves. Interpreting the numbers takes a lot more information than this list provides.”
The union points out that its data shows:
- In 2018, CEOs of S&P 500 companies received, on average, $14.5 million in total compensation
- The average S&P 500 company CEO-to-worker pay ratio was 287 to 1
- The amount the average S&P 500 CEO’s pay has increased in the past decade is $5.2 million
- $7,858: That’s how much the average U.S. rank-and-file worker’s pay has increased in the past decade.
“This year marks the first where nearly all S&P 500 companies have disclosed the pay ratio between their CEO and median employee,” the AFL-CIO explains on its website.
“This important disclosure did not come easy. Major corporations and industry groups lobbied long and hard to hide this valuable information from shareholders and the general public.”
Why does this matter?
“A higher ratio could be a sign that companies suffer from a winner-take-all philosophy where executives reap the lion’s share of compensation,” the union explains.
“A lower ratio could indicate which companies were dedicated to creating high-wage jobs and investing in their employees for the company’s long-term health.”