Cleveland — Ever wonder how much the CEO of your company makes? Let's just say it's probably a lot, and a new study which looked at Ohio employers shows just how huge the disparity is between their salary and the average worker.
This is actually the first time these numbers have been available, because of a federal law requiring publicly traded companies to report the information to the Securities and Exchange Commission.
It is an eye opener, but what some would call bad press for the big employers could lead to changes in worker’s wages.
The study by Policy Matters Ohio, a non-profit think tank, shows that the majority of the CEOs at 44 of Ohio's 100 largest employers, earn more than 200 times what their average worker makes.
"That means that CEO's are making so much, there isn't as much for typical workers," Zach Schiller of Policy Matters Ohio said.
We looked at some of the companies based in Ohio like Sherwin Williams, where the CEO’s compensation is more than $13 million a year. The average employee makes about $42,000.
For Goodyear's CEO, it's nearly $11 million a year, while workers make around $52,000.
And at AK Steel Holding, the CEO earns nearly $14 million, while employees average less than $93,000.
Schiller points to another study, which revealed, "CEO pay had grown over 1,000 percent over the last 40 years, where the typical worker pay was up 11%."
Joe Roman, CEO of the economic development organization Greater Cleveland Partnership, sees things differently.
"I've noticed a major shift of CEO compensation to be increasingly tied to performance incentives, which means the company is growing, hiring more people, thereby contributing to the overall economy," he told us via email.
"Their pay is a reflection to some degree of the price of the stock," Dr. William Elliott of John Carroll University, who has studied CEO pay, argues. "The question then, is how much of their actions are directly related to the price of their stock."
And, he adds, there's a problem when the CEO’s pay is approved by the boards of these companies.
"Often times the CEO is also the chairman of the board," he said. "When the CEO is the chairman, they can direct the direction that the board takes."
Portland, Oregon has a plan to decrease the disparity in pay, making companies pay more in taxes if their CEO's salary is out of whack. It’s something Schiller supports.
"The Government intervenes in everything all the time," he contended "To take one example, we have given giant tax breaks to the richest."
And just FYI: Of the 100 companies in the study, only 10 percent of the CEO's are women.
The greatest disparity in wages are with retailers because they have a lot of part time workers, although Walmart is giving more than $6 million in bonuses to its Ohio associates this year.
Response from Walmart:
"We are proud to have some of the highest starting wages in the retail industry. It’s about moving people beyond entry-level jobs by giving associates clearer career paths, skills-based training and more control of their schedule. Walmart has represented a ladder of opportunity since we started the business, and we want to make sure that’s the case going forward everywhere we operate including here in the U.S. We’ve invested in our associates the past few years to increase wages and develop training and education programs to build a career.
"Here are a few stats on the investments in our associates.
- Since 2015, we’ve invested billions in training, education and wages.
- Earlier this year, we raised our starting wage rate to $11 an hour or more.
- Our average full-time hourly associate earns about $14.10 an hour and key department manager roles start at $15 an hour. Hourly associates can earn as much as $24.70 an hour.
- In 2017, store associates received more than $625 million in bonuses.
- Last year, we promoted over 230,000 associates to jobs of greater responsibility and higher pay. We also converted nearly 150,000 associates from part-time to full-time.
- We have nearly 200 training academies to further develop important skills needed in today’s retail environment – and more than 600,000 associates have completed training since its inception.
- 75% of current store management teams started their careers working at Walmart as hourly associates and their average pay is up to $170,000 a year.
"We are a pay for performance company, and for Doug McMillon, the vast majority of his total compensation (76.4%) is contingent on performance. His compensation takes into account a stock grant of $15.7 million, which has not yet been earned or paid and will be determined based on the company meeting its performance goals that are aligned with our key financial priorities. Doug started as an hourly summer associate in one of our distribution centers in 1984. He rejoined Walmart in 1990 as an assistant store manager while pursuing his Master’s degree and built his career from that role, rising through various leadership positions until he became our CEO in 2014."
Response from KeyBank:
“As disclosed in our most recent proxy, KeyCorp’s CEO pay ratio is 118:1 and the median total annual compensation of the median employee is $68,875. Over 60% of KeyCorp’s CEO pay is in stock based compensation which is tied to the long-term performance of Key and aligns with the value created for the company’s shareholders. Investing in our employees and sharing collectively in the success of our company is a cornerstone of our culture at Key.
"At KeyBank we are focused on delivering ease, value and expertise to build enduring relationships with our clients. We are committed to delivering the highest quality customer service to our clients. As we meet our commitments and deliver for our clients and communities, Key succeeds and our employees benefit.”
Full Statement from Joe Roman, Greater Cleveland Partnership:
"In my experience over the years working with our largest employers, I’ve noticed a major shift of CEO compensation to be increasingly tied to performance incentives which means the company is growing, hiring more people, diversifying and engaging more local suppliers in their supply chains, thereby contributing to the overall economy in the US and our region."