More than 8 in 10 (83%) Americans say that it is important for businesses to avoid major gaps in payment between CEOs and the average employee, according to an upcoming poll from Bentley University. This includes 56% who state that this issue is “extremely important” to them. Americans also continue to give corporations failing marks when it comes to how they manage pay disparities.
Only 13% of those polled stated that companies are doing a good or excellent job at avoiding major pay gaps between CEOs and average employees. The vast majority – 66% – have stated that companies are doing a “poor” job for the third year in a row.
The poll finds a prominent consistency across age groups and between men and women on both questions.
Politically, the majority of Democrats (96%), independent voters (83%), and Republicans (67%) have agreed that it is important to avoid major pay gaps. These findings detail how the issue of CEO pay makes its mark among many Americans, some of whom struggle to make ends meet.
Nell Minow, vice chair of ValueEdge Advisors, stated that “CEO pay is an outrage. It’s atrocious. And it hugely undermines confidence in our institutions.”
The Bentley University poll comes before a vote where Tesla shareholders will vote on whether to award CEO Elon Mask a pay package valued at more than $40 billion.
According to an analysis by Equilar and The Associated Press, it would take a typical employee 196 years to make as much as their CEO made last year alone.
Taxing excessive pay?
The Gallup survey has found little differences between generations on the issue of CEO pay.
70% of those aged 18 to 29 have said that companies are doing a poor job to avoid major pay gaps. This is similar to the 63% who said the same among those who are 60 and above. 67% of men say companies are doing a poor job, compared with 65% of women.
The poll found that 81% of Democrats have stated that companies are doing a poor job, compared to 47% of Republicans who participated in the poll. 64% of Independent voters stated that companies were doing a poor job.
This past January, lawmakers led by Senators Bernie Sanders and Elizabeth Warren introduced the Tax Excessive CEO Pay Act, which would raise taxes on those companies that pay their top executives at least 50 times more than the pay of a typical worker.
Startled CEOs
Bill George, the former CEO of medical device maker Medtronic, has stated that the issue has “gotten completely out of control,” and adds, “What worries me is there is no ceiling on the amounts people are getting. That’s very troubling to me.”
Broadcom CEO Hock Tan raked in $161.8 million. Meanwhile, FICO CEO William Lansing received $66.3 million in compensation.
A FICO spokesperson defended Lansing’s pay package and noted that total shareholder returns under his leadership over the past 10 years were better than 99% of S&P 500 companies.
The spokesperson stated: “FICO structures its executive compensation to be consistent with industry best practices, including prioritizing long-term incentive pay that is based on the company’s performance and aligned with shareholder value creation.”
Putting pressure on the boards
Public companies were required to disclose the ratio between CEO pay and that of the median employee in 2017. Experts had hoped that the requirement would help narrow the pay gap, instead, it seems to have done the opposite.
Bill George stated, “I think people like being on these lists of highest-paid CEOs. It becomes almost an entitlement.”
ValueEdge vice chair, Nell Minow, argued that there is “plenty to go around” when it comes to CEO pay, including on shareholders for being “too lenient” on media companies for failing to hold directors accountable for their abundant pay packages. She stated that there is “no possible way to justify CEO pay.”
She added that, because of this pay disparity, people feel as if there are massive injustices in the world, and that it gives them a sense of cynicism that is “not healthy.”
