At Work

CEO pay and your pay … gobbledygook

CEO pay is irrelevant when it comes to worker pay.

At least now the AFL-CIO has it right. They talk about total compensation and they clarify its CEO pay of S&P 500 companies they are referring to.

While I certainly don’t defend all CEO pay and logic tells me they are not all worth their compensation, this kind of information is extremely misleading and unnecessarily inflammatory.

From the AFL-CIO

Too many working families are struggling just to make ends meet—to afford the basics, like child care, groceries and rent. All the while, CEOs are paying themselves more and more and more. In 2018, CEOs of S&P 500 companies received, on average, $14.5 million in total compensation. CEO pay matters—that’s why we compiled our Executive Paywatch report. 

Take a look now and share it with friends.

For example: Look at the CEO of Verizon. His cash compensation was $4,987,635. Verizon has 144,500 employees. The cash pay equals $34.51 per worker. The total compensation equals $153.67 per worker. Based on what I can find the average hourly worker earns $16-$18 a hour at Verizon. So at $17.00 that’s annual pay of $35,360 which means if they got their share of the CEOs entire compensation they would receive a raise of 0.043% or $0.073 per hour. On average 2/3 of CEO compensation is stock typically having no immediate value, but with potential, including lower value.

Keep in mind too that an increase in pay is not dollar for dollar. You raise pay by a $1.00 then add all employer paid state and federal payroll taxes and employer related costs for employer benefits.

What we need to be fair are more profit sharing and stock award plans for all workers.

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3 replies »

  1. “… government statistics on worker pay tell us that for all 210,160 CEOs in the national Occupational Employment Statistics (OES) database from May 2017, the average CEO receives $196,050 in annual wages.

    So, take the top 2,100 (top 1%) of CEOs out of the equation, and you’ll find that the average CEO pay (for the bottom 99% of CEOs) earns less than $150,000 a year. Compared to median wages, that is a 3:1 ratio or less.

    https://www.forbes.com/sites/jeffreydorfman/2018/08/20/simple-math-reveals-ceo-pay-is-not-hurting-workers/#eec73441abc6

    This is not even disguised envy. It’s crap.

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  2. I believe that some CEOs are overpaid but I blame their board of directors. I like your per employee analogy as what could be reasonable. The US Presidents are only paid $400K per year plus benefits, security, travel, and some expenses and oversee 2 million federal workers, 2 million soldiers, and $4-trillion in debt. Maybe we need to give the US President a raise to get better quality people to run for office. Most CEOs paid over $1 million do not control that many people of budgets. However, CEOs who are the founders of their own company deserve even penny.

    Now some CEO get part of their compensation in the form of stock options. If the company does better, their stock holdings will do better and the CEO would benefit and become more wealthy. To me it makes sense to reward CEO on longer term goals for the company instead of short term gains under their watch.

    Now how about we apply that same deferred compensation concept to Congress. Pay them in T-bills and saving bonds. If they try cashing them before 5 years, they get a 3 month interest penalty. If the government defaults on the debt, they get nothing. Maybe we need a special Congress Bond whose interest is inverse to the T-bill and savings bond rates. So when the US borrowing costs go up, the value of the congress bond drops. Then maybe Congress will start looking past the next election cycle.

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