Across all companies, the average CEO pay was $13.8 million per year, the average median worker pay was about $77, 800, and the average ratio of CEO pay to median worker pay was 204. In other words, on average, CEOs earn around 204 times what his or her median worker earns.
The company with the highest ratio of CEO pay to median worker pay is Discovery Communications. CEO David M. Zaslav earned $156 million in 2014 while median worker pay, based on Glassdoor salary reports, was $80, 000, for a pay ratio of 1, 951. The second highest is Chipotle, where CEO Steve Ells earned $28.9 million while median worker pay was $19, 000, for a pay ratio of 1, 522. Rounding out the top five with the highest pay ratios are CVS Health (Larry J. Merlo, pay ratio of 1, 192); Walmart (Douglas McMillon, pay ratio of 1, 133), and Target (Brian C. Cornell, pay ratio of 939).
The lowest CEO pay ratio was zero at Fossil, whose CEO Kosta Kartsotis reported $0 compensation in 2014. As noted in Fossil’s SEC filing, “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.”
The second and third lowest CEO pay ratios (also effectively zero) were at companies whose 2014 chief executive officers reported $1 salaries: Google (Larry Page) and Kinder Morgan (Richard D. Kinder). Rounding out the five with the lowest pay ratios are Symantec (Michael Brown, pay ratio of 3), Urban Outfitters (Richard A. Hayne, pay ratio of 3).
Some Caveats to Keep in Mind
As with any comparison of CEO pay to worker pay, it’s important to keep in mind several limitations of the above estimates:
- We’ve only examined CEO pay at large, publicly traded companies on the S&P 500. These executives may not be representative of CEOs throughout the whole U.S. labor market. Executives at many small and mid-sized firms are paid dramatically less. Looking only at America’s largest firms gives a misleading view of the ratio of CEO pay to worker pay throughout the economy.
- CEO compensation is highly volatile from year to year. Most CEO pay at large companies is made up of bonuses and stock compensation that swing sharply from year to year. Choosing different base years for our analysis would have a large effect on the rankings of CEO to worker pay for these employers.
- To make a fair comparison, we compare total CEO pay to total worker pay. However, while CEO pay for bonuses, stock options and other pay beyond base salary is accurately reported in SEC filings, most workers underreport bonuses and stock options in surveys, such as Glassdoor’s salary survey. Most workers simply don’t know or don’t recall the details of non-salary compensation. As a result, total pay is likely underreported for workers, which could overstate CEO pay ratios.
- Finally, the distribution of job titles for salary reports on Glassdoor does not necessarily represent the full distribution of positions at these companies. Companies for whom a disproportionate number of low-skilled (or high-skilled) workers have reported their pay on Glassdoor may have median worker pay that is biased downward (or upward). Companies don’t typically disclose their actual distribution of job titles, making it impossible to assure that all jobs are fairly represented when calculating median worker pay.
Public debate about the gap between CEO and worker pay has gained attention in recent years. In this analysis we present new ratios of CEO pay to worker pay based on a unique source of company-level information: Glassdoor salary reports. The results shed new light on pay inequality inside some of the largest public companies—an issue likely to receive increased scrutiny in coming years.