Is This the Most Obscenely Overpaid CEO in America?
Being the CEO of a S&P 500 company in America is a pretty sweet deal: The average base salary for such a position is more than $10 million a year. Add in stock options and other benefits, and that number typically almost doubles.
The working stiffs who actually produce the goods and/or services the company sells? Not quite as cushy a situation. The average full-time worker in this country earns about $45,550 annually — and many of them earn considerably less.
In the late 1950s, according to Forbes, the typical CEO made 20 times the salary of his or her average worker. The gap has gotten much, much bigger.
According to an analysis by the Economic Policy Institute, a Washington, D.C.-based think tank, CEO compensation at America’s 350 biggest companies rose by over 1000% between 1978 and 2017, while workers’ wages rose a mere 11.2% during the same period.
Data collected by 24/7 Wall St. has identified the 50 companies with the most dramatic inequalities between CEO compensation and workers’ pay. Though many of these companies are international conglomerates, the study used American employee salaries in the comparison. If international pay scales were used instead, the gap would be more than 1,000 to one for some 33 of the corporations studied.
That almost makes CVS Health’s ratio of 434 to one, based on CEO Larry J. Merlo’s actual salary, seem reasonable. Almost. Of course when you factor in his total compensation package, that number almost doubles. While Merlo takes home $12,105,481 in cash and $22,855,374 overall, his employees enjoy a median annual income of $27,900.
In fact, Merlo’s salary is in the normal range for the head of a big corporation (CVS grew exponentially in late 2017 when it merged with the health insurer Aetna in one of the biggest mergers of the year). It’s the immense gap between his paycheck and that of his average employee that makes him seem obscenely overpaid.
Though the typical worker at Walmart is paid even less than his or her counterpart at CVS — at $24,600 — the company’s CEO has a base salary of “only” $5,133,256, making the ratio 209 to one. And while the CEO of Universal Health Services gets $6,373,857, his employees average out at $54,600, so the ratio is 117 to one, which almost seems fair.