10 companies with huge pay gaps
Larry Merlo wasn’t the highest-paid corporate boss last year. But the CVS Caremark (CVS) CEO had an unusual distinction: His pay was 422 times the median pay of workers at his company, the biggest gap in a new survey comparing the earnings of CEOs with the pay of their employees.
The new numbers, compiled by compensation-research firm Payscale, demonstrate a familiar theme: CEO pay has been skyrocketing while middle-class pay has been stagnant. As income inequality worsens and the middle class falls further behind, pressure has slowly been building for government fixes such as a higher minimum wage, subsidized worker training and even a global wealth tax.
Meanwhile, analysis such as Payscale’s brings greater scrutiny to firms with CEOs earning outsized pay. Here are 10 companies with the biggest gaps between CEO and worker pay:
CVS Caremark CEO Larry Merlo: 2013 pay (excludes stock grants but includes bonuses): $12.1 million. Median employee pay: $28,700. Ratio of CEO-to-worker pay: 422:1
Goodyear Tire & Rubber (GT) CEO Richard Kramer: 2013 pay: $15.1 million. Median employee pay: $46,700. Ratio: 323:1
Walt Disney (DIS) CEO Robert Iger: 2013 pay: $17 million. Median employee pay: $60,300. Ratio: 283:1
Twenty-First Century Fox (FOXA) CEO Rupert Murdoch: 2013 pay: $20.9 million. Median employee pay: $77,900. Ratio: 268:1
Honeywell (HON) CEO David Cote: 2013 pay: $16.6 million. Median employee pay: $78,400. Ratio: 211:1
Boeing (BA) CEO: James McNerny: 2013 pay: $15.7 million. Median employee pay: $79,300. Ratio: 198:1
Altria (MO) CEO: Martin Barrington: 2013 pay: $12.1million. Median employee pay: $69,000. Ratio: 175:1
Aflac (AFL) CEO Daniel Amos: 2013 pay: $6.4 million. Median employee pay: $40,800. Ratio: 157:1
Deere & Co. (DE) CEO Samuel Allen: 2013 pay: $8.7 million. Median employee pay: $57,900. Ratio: 150:1.
FedEx (FDX) CEO Fred Smith: 2013 pay: $7 million. Median employee pay: $48,300. Ratio: 145:1.
A few notes about the data: Payscale selected 100 of the biggest public companies that had filed tax forms by April 1, which exludes large firms such as Walmart (WMT), Exxon Mobil (XOM), and J.P. Morgan Chase (JPM). Pay ratios tend to be higher in industries where traditional workers typically earn low pay, especially retail (including CVS). And they’re typically lower in industries such as technology, energy and pharmaceuticals, where workers can earn close to $100,000 or more.
Excluding stock grants can skew the numbers. Oracle (ORCL) CEO Larry Ellison, for instance, earned $78 million in 2013, making him the nation’s best-paid CEO. But excluding stock, his compensation was a modest $1.5 million. With the stock, Ellison’s pay was 750 times the typical Oracle worker’s pay (which is a healthy $104,500). But excluding the stock, the ratio plunges to 15:1.
Payscale excluded stock grants in order to make valid cpay omparisons between CEOs and regular workers, who don't typically receive stock. The value of stock grants can vary widely from year to year and even drop to 0 if the stock performs poorly or the overall market simply declines. Still, a bull market entering its sixth year has richly rewarded CEOs. Their employees should be so lucky.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.
