AFL-CIO study finds CEO/employee pay gap is widening

The study says the average CEO earned 331 times the average employee’s salary in 2013

Although one recent study found that CEO pay slowed in 2013, another released by the AFL-CIO says that the gap in pay between CEO’s and their employees is as large as ever.

The numbers, released by the largest federation of unions in the United States, say that CEOs in S&P 500 companies took home an average of $11.7 million in 2013. That data comes from the Securities and Exchange Commission and Salary.com. The average employee, meanwhile, earned just $35,293.

In total, the average CEO earned 331 times the average employee’s salary in 2013. According to the AFL-CIO findings, that figure is slightly larger than the discrepancy ten years ago (301:1 ratio) and much larger than the discrepancy thirty years ago (46:1).

In particular, the AFL-CIO study takes issue with the difference between minimum wage and CEO pay. According to the study, S&P 500 companies earned $41,249 in profits per employee last year, while a full-time worker on minimum wage only earned $15,080.

“In recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high,” the AFL-CIO report said. “Even as companies argue that they can’t afford to raise wages, the nation’s largest companies are earning higher profits per employee than they did five years ago.”

The AFL-CIO report joins a growing chorus from activist shareholders to limit CEO compensation packages. A January study from Towers Watson and Alliance Advisors found that 72 percent of investors feel the current U.S. executive pay model has led to excessive pay levels. In addition, oilfield services and drilling company Nabors Industries Ltd. announced on April 14 that it would institute sweeping changes of its executive pay model, including the limiting of severance packages to 2.99 times the executive’s yearly salary and bonuses.

 

For more on CEO compensation in legal news, check out these recent InsideCounsel articles:

Former Direct Access Partners heads charged in bribery scheme

Intel CEO’s salary takes a hit

Facts and Figures: CEO pay stagnant in 2013

South Korean executives reveal compensation under revised rulings

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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