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Why Is Everyone Talking About CEO Pay?

Say Contributor

Earlier this year, 57% of Disney shareholders approved a compensation package for CEO Bob Iger that will be worth as much as $35 million. That’s for one year’s worth of work, mind you. CNBC reported that Abigail Disney, filmmaker, philanthropist and granddaughter and grand niece of company co-founders Roy and Walt Disney, responded that CEOs "in general are paid far too much." Though she did not single out Iger, she added that "if your CEO salary is at 700, 600, 500 times your median workers' pay, there is nobody on Earth—Jesus Christ himself isn't worth 500 times his median workers' pay." It can be difficult to know when an idea has fully entered the contemporary zeitgeist. But when even a Disney heiress thinks that CEOs are wildly overpaid, it is safe to say that something is up. And as recently outlined in our explainer on proxy voting, executive pay, or “Say on Pay,” is another issue where you as a shareholder can have a say. Though it is hardly a new phenomenon, income inequality—or the pooling of wealth among a sliver, or “1 percent,” of the population— wasn’t something talked about widely for a long time. But the topic re-entered the national conversation during Senator Bernie Sanders first campaign for President, and it is a theme he has returned to repeatedly during his current run. Last year he introduced the ‘Stop BEZOS Act’ in the Senate, which was meant to highlight what he felt was the perceived disparity between Amazon chief executive Jeff Bezos, the richest man in the world, and the wages of Amazon workers, many of whom reportedly rely on food stamps to make ends meet. The bill called for large employers like Amazon and Walmart to reimburse the government for food stamps, public housing, Medicaid and other federal assistance received by their workers. In response, Bezos raised Amazon workers' wages to $15 an hour. Regardless of your opinion on Sanders and his politics, he seemingly tapped into a raw cultural nerve, and has continued to draw attention to low hourly minimum wage for workers at other companies. He appeared at Walmart’s 2019 shareholder meeting and held a town hall at McDonald’s ’meeting, calling for both companies to raise worker pay to $15 an hour. Sanders is also not the only one questioning the gap between the pay of CEOs and rank-and-file employees. Since 2015, the shareholder advocacy non-profit As You Sow has been ranking “The 100 Most Overpaid CEOs” using a formula that contrasts "excess CEO pay assuming such pay is related to total shareholder return" and "companies where the most shares were voted against the CEO pay package," then lists "the company, the CEO and his pay as reported at the annual shareholder meeting, and the pay of the company’s median employee." Number one with a bullet (or lucrative bonus, as it were) is Fleetcor Technologies’ CEO Ronald F. Clarke, who boasts a CEO-to-median-worker-pay ratio of 1,517.