The Employee-CEO Pay Gap Mystery

Via LearnVest By Libby Kane ~

ceo pay ratiosIn 2010, Congress passed the Dodd-Frank Act, a series of regulations intended to facilitate financial reform.

One of the measures instituted by the bill was the mandatory disclosure of CEO-to-worker pay ratios in public companieshow much more a company’s chief executive makes than its workers (as represented by the median salary of all employees other than the CEO).

Bloomberg Businessweek asks the question: Why haven’t those numbers been disclosed?

Since 2010, this particular request has been with the Securities and Exchange Commission, which is still developing the standard for calculating and reporting the ratio. It won’t come as a surprise that not everyone is on board with the rule becoming reality. Critics say that the information won’t provide any useful or actionable data for investors.

Instead of waiting for the SEC to develop a standard and for public companies to fall in line, Businessweek went ahead and calculated pay ratios for 250 public companies. They aren’t the first to do this, but they’re the first to take into account industry differences and employee benefits, which actually makes the ratios smaller than they would be otherwise.

The results show that the average CEO from the top 100 companies they analyzed makes 495 times as much as the company’s other employees.

Businessweek found that these 10 companies had the highest pay ratios:

  1. JC Penney Co. (1,795)
  2. Abercrombie & Fitch Co. (1,640)
  3. Simon Property Group Inc. (1,594)
  4. Oracle Corp. (1,287)
  5. Starbucks Corp. (1,135)
  6. CBS Corp. (1,111)
  7. Ralph Lauren Corp. (1,083)
  8. NIKE Inc. (1,050)
  9. Discovery Communications Inc. (833)
  10. Yum! Brands Inc (819)

Go here to see the full list.

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