JAN 14 READING: Sainato, M. (2024). CEOs with lowest paid US workers (ARES)

Overview of CEOs and Low-Wage Workers

• A report highlights the disparity between CEO compensation and the wages of low-paid workers in the US, suggesting a critical focus on short-term profitability by CEOs.

Key Findings from the Report

• Author & Release: The report, from the Institute for Policy Studies, emphasizes CEOs at leading low-wage companies prioritize personal gains over employee welfare.

• Stock Buybacks: From 2019 to 2023, the 100 largest low-wage employers (S&P 500 companies) spent $522 billion on stock buybacks, often at the expense of employee investment.

  • Lowe’s: $42.6 billion on stock buybacks.

  • Home Depot: $37.2 billion on stock buybacks.

• Potential Employee Bonuses:

  • Lowe's could have given its 285,000 employees an annual bonus of $29,865 for five years.

  • Home Depot could have provided five annual $16,071 bonuses to each of its 463,100 employees.

CEO Priorities vs. Employee Benefits

• Long-term vs. Short-term: The report captures concerns about CEOs focusing disproportionately on immediate financial benefits, equating stock repurchase programs to a "financial scam" that inflates CEO compensation while workers struggle with daily living costs.

• Example Corporations: 47 of the 100 employers spent more on stock buybacks than on capital improvements.

Wage Disparities

• Glaring Gaps: Companies like AutoZone and Chipotle underscored disparities in stock buyback versus retirement contributions, with AutoZone spending 92 times more on buybacks than on 401(k) contributions, and Chipotle spending 48 times more.

• Retirement Plan Participation: 92% of Chipotle workers eligible for a 401(k) plan had a zero balance, highlighting issues with compensation adequacy.

Proposed Legislation

• Stock Buyback Legislation: Proposals in Congress aim to return stock buybacks to pre-1982 levels and impose limitations on CEO stock sales following buybacks. The SEC proposed a transparency rule for stock buybacks, later struck down by legal action.

• Taxation Proposals: Suggested increases in corporate taxes and limitations on excessive CEO compensation.

• Biden Administration Efforts: Attempts to align federal contracts with more equitable corporate pay structures.

CEO Compensation Trends

• Pay Discrepancies:

  • CEO median compensation compared to median worker pay resulted in a drop from 603 to 1 in 2022 to 538 to 1 in 2023.

  • Ross Stores: CEO Barbara Rentler earned $18.1 million in 2023, 2,100 times more than the median employee pay of $8,618.

  • Nike: CEO John Donahoe II’s total compensation was $32.8 million, which is 975 times the median employee salary.

Historical Context

• Longitudinal Trends: Between 1978 and 2022, CEO pay surged by 1,209.2%, in stark contrast to a mere 15.3% increase in median worker forecasts, according to a report by the Economic Policy Institute.

• Reflective Changes: There has been a slight improvement for low-wage workers in their struggles against rising inflation and living costs, attributed to successes in minimum wage hikes and labor organization efforts.