Executive Excess

The CEO-worker pay gap at low-wage corporations grew even wider in 2021.

That’s according to a new report by the Institute for Policy Studies, which revealed stats on how low-wage corporations have continued to pump up CEO pay during the pandemic. The report focused on the 300 U.S. corporations that had the lowest median pay in 2020.

“CEOs’ pandemic greed grab has sparked outrage among Americans across the political spectrum,” said the report’s lead author Sarah Anderson, director of the IPS Global Economy Project and a veteran executive compensation analyst. She cites one recent poll showing that 87% of Americans see the growing gap between CEO and worker pay as a problem for the country.

Some of the reports findings include:

• At 106 of the 300 firms, median worker pay did not keep pace with inflation.
• The average gap between CEO and median worker pay in the sample jumped to 670-to-1, up from 604-to-1 in 2020. Forty-nine firms had ratios above 1,000-to-1.
• CEO pay at the 300 firms increased by $2.5 million to an average of $10.6 million, while median worker pay increased by only $3,556 to an average of $23,968.

The report also found that low-wage firms that cut worker pay in 2021 spent billions on stock buybacks. At the 106 companies in the survey’s sample where median worker pay did not keep pace with inflation, 67 spent money on stock buybacks, a maneuver that inflates executive stock-based pay. These repurchases totaled $43.7 billion.

• The biggest buyback firm: Lowe’s. With the $13 billion the retailer spent on share repurchases, the company could have given each of its 325,000 employees a $40,000 raise. Instead, median pay at the company fell 7.6 percent to $22,697.

Taxpayer dollars are fueling corporations with extreme CEO-worker pay gaps.

• Of the 300 companies, 40% received federal contracts between Oct. 1, 2019, and May 1, 2022. The combined value of these contracts: $37.2 billion.
• At these low-wage contractors, the average CEO-worker pay ratio hit 571-to-1 in 2021. Only 6 of the 119 contractors had pay gaps of less than 100-to-1.

This was the 28th edition of the annual IPS Executive Excess series. The full report, “Executive Excess 2022,” is available at: https://ips-dc.org/report-executive-excess-2022.