Capitol Report
By State Representative, Leon D. Young
Leon D. Young
In 2010, Congress approved the Dodd-Frank legislation requiring that the pay ratio for a chief executive officer (CEO) be an element in each year’s pay disclosures for publicly traded companies.
The idea was to expose how wide the gap was between a company’s chief executive and its rank-and-file workers.
Not surprisingly, academic research shows that the worker-to-CEO gulf has been widening.
According to a 2014 study by Alyssa Davis and Lawrence Mischel at the Economic Policy Institute, chief executive pay as a multiple of the typical worker’s pay rocketed from an average of 20 times in 1965 to 296 times in 2013.
Equilar, the compensation analytics firm in Redwood City, Calif., provided figures on executive compensation in 2014 at a number of the nation’s largest companies.
Filings from 64 companies that had submitted their proxies by March 30, 2015, were included in this exercise.
Compensation consisted of base salary, cash bonuses, perquisites and the grant-date value of stock and option grants.
And, get ready for this: Equilar found that among these 64 companies, the median CEO pay package was $11.5 million, down 4 percent from last year.
Moreover, in a subsequent analysis, the Equilar 100 CEO Pay Study found median package was $14.3 million, an almost 5 percent increase from last year.
To further illustrate the point, the company with the widest pay gap on list was Walt Disney, whose chief executive, Robert Iger, received $43.7 million last year.
It’s estimated that Disney’s median worker received $19,530 last year, that translates to a CEO multiple of 2,238 times to one.
Second on the list was Satya Nadella, Microsoft’s chief.
His pay package of $84.3 million last year placed him at 2,012 times the estimate of $41,900 for the median employee’s earnings at Microsoft.
Oracle’s founder, Lawrence J. Ellison, ranks third on the pay gap list: 1,183 to one; while Steven M. Mollenkopf, chief executive of Qualcomm, whose $60.7 million in compensation is next at 1,111 times the median worker estimate at the San Diego company, which makes wireless telecommunication equipment and software.
Income inequality is a very serious issue that needs to be address immediately in this country. True enough, CEOs are bright, talented people who bear enormous corporate responsibilities, but does that justify paying someone $84 million in compensation, while the average worker struggles to subsist?
In next week’s column, I will continue my discussion on income inequality and will look at one CEO’s innovative approach to arresting this disturbing trend.
As well as, the fallout created from this particular solution.