Study: CEOs’ pay 140 times more than workers’

A group of U.S. chief executive officers earned 140 times more last year than the median workers at their companies, according to a survey that gives a glimpse of newly required pay ratio disclosures.

Workers at the 356 public companies included in the study received $60,000 in median compensation, Equilar said in the report this week, which didn’t include individual CEO pay figures.

Thousands of U.S. companies will reveal the ratio for the first time in coming months, required as part of the 2010 Dodd-Frank Act. Supporters of the rule hope it will highlight growing income inequality and force corporate boards to rein in excessive executive compensation. Critics see it as a populist measure intended only to shame CEOs, saying it’s costly to calculate and difficult to compare between industries.

“Since half of a company’s employees are being paid less than the median, a big concern is that internal conversations at the water cooler will lead to a decrease in morale across the business,” said Nathan O’Connor, a managing director at Equity Methods. Still, preparing the figure has helped many firms get a better sense of their pay equity, he said.

Critics have savaged the pay ratio, saying it lacks purpose and lends itself to those who seek to vilify corporate executives. The ratio will “perhaps do more to inflame than to inform,” Glenn Booraem, Vanguard Group’s head of investment stewardship, said in 2017 .

Many boards are mostly worried about how the half of workers who earn less than the median will react, according to a survey from Willis Towers Watson.

“Unions will be very focused on this disclosure,” said Jim Kohler, a Willis Towers director.