The career management website Glassdoor has published a report (via VentureBeat) highlighting how much a CEO of a company earns yearly compared to average worker pay in 2015 for large US companies. The report basically shows the difference in the amount of salaries earned by an average employee and executives.
The report shows the ratio of CEO pay to median worker pay for companies listed in the S&P 500. Based on their numbers, the average CEO earns $13.8 million a year while the average median worker pay was about $77,800, and the average ratio of CEO pay to median worker pay was 204. Putting it in simple words, it means that a CEO of a company earns, on average, 204 times more than what his or her median worker earns.
The company with the highest average ratio of CEO pay to median worker pay was Discovery communication where CEO David M. Zaslav earned $156 million in 2014 while the median worker pay, based on Glassdoor salary reports, was $80,000, for a pay ratio of 1,951. Microsoft isn't listed too far down, the software giant has an average ratio of CEO pay to median worker pay of 615. Satya Nadella earned almost $84.3 million in 2014 while the average worker pay was $137,000 per year.
As far as the tech companies are concerned, the lowest in the list is Google with a ratio of 0 -- Larry Page was paid $1 in 2014, as per the report from Glassdoor.
As with every research report, there are some caveats and limitations. Glassdoor highlighted some limitations to the figures released:
- The compensation a CEO receives is highly volatile as it also contains bonuses and stock compensation which vary every year.
- Although CEO pay includes bonuses, stock compensations and other added incentives, including the base pay which is usually mentioned in the SEC filing, most workers don't accurately report the bonuses and stock options they get in surveys -- they usually under-report it.
- There are a variety of positions available at these companies. So, the distribution of job titles doesn't represent the full distribution of positions at these firms. Some companies have a larger proportion of low-skilled labor, which affects the median pay. Usually, companies don't disclose the actual job title distributions so the median worker pay can be misleading at times.
You can read the complete Glassdoor report, and let us know about your thoughts.