3 prominent CEOs earn less than employees
New ‘pay ratio’ rule shows opposite gap at some companies
Workers at most companies would readily trade their pay for the CEO’s. But that’s not the case at a few giant companies.
There are three current CEOs of companies in Standard & Poor’s 500, including Kosta Kartsotis of watchmaker Fossil, Lawrence Page at online advertising firm Google and John Mackey at organic food seller Whole Foods Market, who were paid less than their company’s median employee pay, according to a USA TODAY analysis of CEO pay data from S&P Capital IQ and employee compensation from Glassdoor.com.
The so-called CEO “pay ratio” is getting great attention since the Securities and Exchange Commission on Wednesday approved a new rule that would force U.S. companies to spell out the gap between what CEOs are paid and what the median employee receives. The rule could cause embarrassment for some companies and boards considering CEOs typically are paid 216 times more than their employees. That’s up from a pay gap of 20 times in the 1950s, according to Bloomberg
Businessweek. There are even nine CEOs that made 800 times more than the median worker.
But there’s an opposite pay gap at some companies. Perhaps the most startling example is Google, which has had net income of more than $15 billion during the past 12 months by mining consumers’ online data and using that to sell lucrative online ads. Page was paid just $1 during last fiscal year as the head of the company. That pay is in stark contrast with the company’s relatively high median employee pay of $110,000 a year, Glassdoor.com says. That gives Google the 24th highest median salary of any of the 452 companies in the S&P 500 that have Glassdoor median pay statistics and valid CEO pay in this analysis.
Organic food seller Whole Foods might be infamous for its “whole paycheck” prices, but CEO Mackey isn’t reaping the rewards in his paycheck. He was paid just a buck last year — which is even lower than the $24,880 median pay reported by employees. And then there’s Fossil’s long-time CEO Kartsotis — who was paid nothing last fiscal year — even as employees took in an median $35,240 pay.
But don’t go feeling too sorry for these CEOs, since some have found wealth despite their relative low salaries. Page might not get paid much, but he has some- thing that’s even better than a big salary: loads of Google stock. Page owns 43.9 million shares of the company — making him the largest single owner of Google, S&P Capital IQ says. Shares of Google have risen 16% over the past year, meaning the value of Page’s stock has soared roughly $4 billion during that time.
And while Mackey isn’t paid much, Whole Foods’ co-CEO Walter Robb was paid $2.8 million last year — 111 times greater than employees’ median pay.
This analysis has some caveats, as companies aren’t required to disclose median employee pay yet. These numbers could vary from what companies themselves provide, as many of these caveats will be removed when rules mandate certain disclosures.
The universe of companies in this analysis was limited to 452 companies in the S&P 500 where valid employee and CEO pay was available. Median employee pay is disclosed by employees anonymously on Glassdoor, so there could be some self-reporting errors and not all job functions might be represented. The universe was limited only to companies that have at least 30 worker pay reports by employees on Glassdoor who have worked at the company since at least 2010.
But for now, it’s hard to blame these employees if they might not want to be the CEO. They might have to take a pay cut.