When Abigail Disney recently revealed her outrage at learning undercover the extent to which Disneyland workers were struggling to make ends meet, she highlighted a serious national embarrassment across Corporate America.
The Disney heiress and daughter of Roy E. Disney, who has been described as both a filmmaker and activist, urged CEO Bob Iger to fix an enormous wage gap between his annual pay and the company’s average worker. Iger was paid $66 million last year, whereas the median salary of a Disney employee was $46,127.
How can people who work at the so-called Happiest Place on Earth possibly match the smiles of paying customers, she wondered, when scores of disgruntled employees shared such extreme financial struggles? Rather ironic, I thought, considering how the theme park’s admission keeps rising at obscene levels. So much for sharing in the wealth.
Although praising Iger for being “a great CEO by any measure, perhaps even the greatest CEO in the country right now,” she lamented that “by any objective measure, a pay ratio over a thousand is insane.” In May, she stressed to a House committee the importance of delivering returns to shareholders “without trampling on the dignity and rights of their employees.”
Recent federal data shows that an S&P 500 company CEO earned 287 times more on average than his or her median employee last year. It was a staggering $14.5 million in 2018 ($500,000 more than the previous year) compared to $39,888 for rank-and-file workers (whose raise was barely more than $1,000 from 2017).
Interestingly enough, all public companies were required this year to disclose for the first time their pay ratios in filings with the U.S. Securities and Exchange Commission. In the past, they only needed to report compensation for top executives.
I feel strongly about this topic, which I first blogged about in 2009 when lamenting not only the cringe-worthy pay ratio problem in this country, but also golden parachutes for executives who missed earnings targets and spoiled shareholder value.
“How much pay is enough to live on comfortably without arrogance and disregard for one’s underlings?” I wrote 10 years ago. “Is it $3 million? Is it $50 million? Is it $1.5 billion?”
Noting a growing concentration of wealth that deeply separated average working Americans from their corner office occupant, I also referenced how chief executives were “said to have earned anywhere from 179 to 369 times the pay of an average worker.”
My conclusion a decade later is the same as I initially suggested: Let’s not begrudge captains of industry for earning their keep but at least rethink capitalist zeal “to ease the system’s extremes, correct any perceived imbalances and aspire to true pay-for-performance packages. There’s just no escaping this moral imperative and the time to act is now.”
Corporate boards clearly need to address the pay-ratio issue and decide on amounts that not only seem reasonable, but also reward all employees for a job well done. There are many avenues available, including profit-sharing plans and stock options as well as bigger matching contributions to retirement savings plans. I have noticed a cultural shift in the workplace where younger employees increasingly value respect from supervisors and corporate responsibility. The customers of these companies also share those ideals, so it makes perfectly good business sense to ensure that prudent pay ratios are in place.