Del Monte Produce, makers of the beloved fruit cups present in every elementary school, paid their CEO 1,465 times more than their typical employee last year. CEO Mohammad Abu-Ghazaleh made $8.5 million, while their median employee, located in Costa Rica, made $5,833.
Del Monte had to reveal this astounding information as the result of a new regulation requiring publicly held firms to report their CEO-worker pay gaps. Corporations fought tooth and nail for nearly eight years to squelch this regulation — to no avail. Now, the American public will finally know more about the companies that dominate their lives.
We’ll now be able to know the gap between what top executives make, what their typical employees make, and, in some cases, more information on the location of their employees. In the case of Del Monte, for example, the firm report that 80 percent of their employees are based in Costa Rica, Guatemala, Kenya, and the Philippines, while the remaining 20 percent are scattered in 33 other countries.
We know all of this thanks to the Dodd-Frank financial reform bill which laid out requirements that public U.S. companies had to report the ratio between their CEO’s pay and that of the median worker. The SEC finally approved this regulation in 2015. The ratios that are just now starting to trickle out paint a disturbing picture of corporate greed.
The problem of CEOs making crazy amounts of money is nothing new. Average pay ratio levels among all large U.S. firms have been growing since the 1970s, and were around 347-to-1 in 2016 —about eight times the level back in 1980. The new pay ratio data reveals how truly wide the gaps are within specific companies.
After Del Monte, Marathon Petroleum has the second-largest pay ratio reported so far, at 935-to-1. The fourth-largest oil and gas company in the United States paid their CEO, Gary Heminger, $19.7 million dollars last year for overseeing a company making money hand over fist refining tar sands oil, polluting their neighbors, and running unsafe refineries that hurt their employees.
Marathon’s median worker made only $21,034 last year.
Another interesting batch of pay ratio data have come out from banks that stand to benefit from Idaho Republican Senator Mike Crapo’s banking reform bill, which is expected to get a vote next week. The bill aims to reduce risk controls on banks with assets between $50 billion and $250 billion put into place when Dodd-Frank passed.
However, as my Institute for Policy Studies colleague Sarah Anderson notes, pay figures at these banks are one clear sign that these are not your local corner community banks. So far, seven banks that would benefit from the Crapo bill have released their pay ratios:
- Northern Trust’s CEO made $11.8 million last year, 169 times that of their median worker
- SunTrust’s CEO pay of $9.6 million was 159 times that of their median employee
- BB&T’s CEO made $12.7 million last year, 150 times that of the median employee
- Fifth Third’s CEO made $8.7 million, 145 times more than the median worker
- Huntington Bank’s CEO made $8.6 million last year, 145 times more than their median employee
- M&T’s CEO made $4.2 million, or 72 times that of their median worker.
- Silicon Valley Bank’s CEO made $6.1 million, 46 times more than their median employee
Do these banks look like they need regulatory relief? If they can afford to pay their CEOs these massive pay packages, they can afford a little more supervision so we can avoid future financial bailouts. And as Anderson points out, excessive executive compensation in the financial sector is particularly disturbing, given the role that the reckless “bonus culture” played in the 2008 crisis.
Even smaller financial institutions, such as regional banks First Tennesseeand Umpqua Bank, have surprisingly large gaps. First Tennessee’s CEO got paid a shockingly high $10.3 million, creating a ratio of 59 to 1. Umpqua paid their CEO more than $3 million and had a ratio of 54.8 to 1. OFG Bancorp, owner of one of Puerto Rico’s main local banks, has one of the highest ratios for these mid-size companies at 77.6-to-1, with their CEO José Rafael Fernández being paid $2.3 million, even as much of the rest of the island continues to struggle to recover from hurricane Maria.
This early review of some of the first corporate disclosures shows the gaps between CEO and worker pay run astoundingly high at many Fortune 500 firms as well as smaller financial firms. As the release of pay ratio data through company proxy statements accelerates over the next month, there are sure to be many more eye-popping figures to come. Hopefully this will lead to the growing calls for pay practices that reward all employees fairly.