The CEOs of the top 100 companies paying the lowest wages made an average of $601 for every $1 earned by the average worker last year as executive compensation continued to climb to record highs.
A new report from the Institute for Policy Studies singles out which 100 companies in the S&P 500 pay their workers the least, companies the report dubs the “low-wage 100”. These companies paid their employees – including workers outside the US and part-time workers – a median wage of $31,672 in 2022, while their CEOs took home an average $15.3m.
Many of these companies also invest millions each year in stock buybacks – when a company buys shares of its own stock as a way to boost stock prices and give more money to shareholders. Of the “low-wage 100”, 90 companies conducted stock buybacks, spending a collective $341.2bn buying their own shares from January 2020 to May 2023.
“This is really hard data that reinforces what is the major story in corporate America: instead of investing in their workforce or investment to be competitive, in the long term, they’ve been putting out huge sums to enrich their CEOs and their shareholders,” said Sarah Anderson, the report’s lead author. “These are sums that workers at these companies could not even wrap their minds around.”
The report highlights companies that stood out within the group, including the highest-paid CEOs and the largest stock buybacks.
LiveNation CEO Michael Rapino had the largest compensation of the group, raking in $139m in 2022. Meanwhile, the median pay for the company last year was $25,673. Though LiveNation has come under scrutiny for its domination of the US live music industry, its revenue has been soaring over the last year as more Americans attend concerts.
Of the companies that had stock buybacks, Lowe’s spent the most, dedicating $34.9bn to its own shares over the last three years. Lowe’s CEO, Marvin Ellison, had a compensation of $17.5m in 2022, while the median worker pay was $29,584 for the year.
CEOs of the “low-wage 100” who had been at their company from at least 2019 until 2022 saw their personal stock holdings increase 33% during those three years, growing an average of $184.7m. In comparison, median pay at the companies rose 10%.
The Dollar Tree CEO, Michael Witynski, saw the biggest increase in his stock holdings, which went up 2,393% over the last three years to $30.5m as the company grew its retail footprint. The median pay for workers actually decreased in comparison, going down 4.4% to $14,702. The company spent about $2bn on stock buybacks over the last three years.
Stock buybacks have become more commonplace over the last few years. Buybacks reached a record high in 2022 and are expected to reach $1tn for the first time in 2023. Proponents argue that they rightfully give a company’s profits to its shareholders and help create activity in the stock market, but the practice is attracting criticism in Washington.
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The bipartisan Inflation Reduction Act of 2022 included a 1% excise tax on stock buybacks, making them more expensive for companies to do. In his State of the Union address earlier this year, President Joe Biden proposed increasing the excise tax to 4%.
The report argues there are more policies the federal government can take on to disincentivize stock buybacks. For example, by prioritizing companies that don’t engage in stock buybacks when picking contractors and companies that receive subsidies. According to the report, 51 out of the “low-wage 100” companies received federal contracts over the last three years worth $24.1bn and spent $160bn on stock buybacks. The report calculated that the average CEO compensation for these 51 companies was $12.7m in 2022. In comparison, a White House cabinet member makes $226,300 a year.
“We’re not talking about putting an iron ceiling on how much a CEO can make, but we can use government policy to encourage companies to move in the right direction,” Anderson said.
Source: US Politics - theguardian.com
