How much more does your boss make than you?
According to new research from Glassdoor released Tuesday, the average CEO earns about 204 times more than their average employees.
Glassdoor reviewed CEO pay and compensation based on Securities and Exchange Commission (SEC) proxy filings for S&P 500 companies, and compared them to the salaries submitted by employees to the Glassdoor database. Glassdoor only looked at companies with 30 or more salary reports submitted by employees.
According to Glassdoor’s findings, the average annual CEO salary was $13.8 million while the average median worker pay was about $77,800. In some cases, the ratio between CEO and employee is 1,000 greater or more.
Based on 2014 data, Glassdoor found Discovery Communications had the most imbalanced ratio of CEO pay to median employee pay, with CEO David M. Zaslav earning over $156 million in 2014 while the median worker earned $80,000. That’s a pay ratio of 1,951 to 1.
A similar report from the labor union federation AFL-CIO also listed Zaslav as the highest-paid CEO of 2014. In 2013, the group found the CEO to worker pay ratio was 331 to 1. However, the AFL-CIO relied on employee salary estimates based on data from the Bureau of Labor Statistics while Glassdoor used salary data reported by company employees.
A taste of what’s to come
Glassdoor chief economist Andrew Chamberlain said the report offers a good starting point to discuss the salary gap between bosses and workers.
“People care about inequality and fairness in payrolls where they work,’’ Chamerblain told Boston.com in a phone interview. “Transparency helps get the facts straight so we can have a fair debate about what CEO pay should be, and shed some light on practices that lead to a more informed debate.’’
Glassdoor’s report is a preview of things to come. Under new rules adopted by the SEC, companies will be required to disclose the ratio of CEO to median employee pay by 2017. The new rules are meant to provide more transparency on the salaries and pay ratios between CEOs and workers at publicly-traded companies.
The most extreme cases
After Discovery Communications, the second-highest CEO-to-worker pay ratio is at fast-food chain Chipotle where CEO Steve Ells earned over $28.9 million while the median salary for a Chipotle employee was $19,000, a pay ratio of 1,522 to 1.
Chamberlain points out that bigger pay imbalances are common at retail companies where employees typically earn lower wages.
After Chipotle, the largest pay differences went to CVS Health CEO Larry Merlo (pay ratio of 1,192 to 1), Walmart CEO Douglas McMillon (pay ratio of 1,133 to 1), and Target CEO Brian Cornell (pay ratio of 939 to 1).
At the opposite end of the scale, the retailer Fossil had the lowest pay ratio between CEO and employee. CEO Kosta Kartsotis earned a salary of $0 in 2014.
According to SEC filings, “Mr. Kartsotis again refused all forms of compensation for fiscal 2014. Mr. Kartsotis is one of the initial investors in our company and expressed his belief that his primary compensation is met by continuing to drive stock price growth.’’
After Fossil, the lowest pay gaps were reported at Google and Kinder Morgan where CEOs of both companies earned $1 in 2014. Although it’s worth noting that while he only earned $1 in 2014, Google CEO Larry Fine owns a commanding share of Google’s stock which puts his net worth at roughly $32.9 billion, according to Forbes.
Of the six Boston-based companies on Glassdoor’s list, only two had a CEO pay ratio greater than the national average ratio of 204 to 1. State Street CEO Joseph Hooley earned a salary of over $18.8 million in 2014 while State Street employees took home a median salary of $50,921, a pay ratio of 370 to 1. Vertex Pharmaceuticals CEO Jeffrey Leidan earned a salary of more than $36.6 million while the median employee salary at Vertex was $123,840, a pay ratio of 296 to 1.
The remaining four Massachusetts-based CEOs were American Tower’s James Taiclet, Jr. (pay ratio of 187 to 1), Biogen Idec’s George Scangos (pay ratio of 157 to 1), Iron Mountain’s William Meaney (pay ratio of 88 to 1), and Akamai’s F. Thomson Leighton (pay ratio of 58 to 1).
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