Yesterday Swiss voters rejected a proposal to cap executive pay at twelve times that of junior employees. The referendum was opposed by 65 per cent of voters, and the turnout for the vote was surprisingly high – the highest in three years, in fact – at 53 per cent.
Earlier this year, Bloomberg conducted research into CEO to employee pay ratios at the top 250 companies from Standard & Poor’s 500 Index. Needless to say, not one pays ordinary employees anywhere near a twelfth of their executives’ salaries – the lowest executive to employee pay ratio on the list is 173:1 (at Agilent technologies). Eight companies pay their executives over 1000 times more than they pay their average worker.
Six out of the top ten highest-ranked companies in terms of CEO:employee pay ratios are consumer companies. There are four clothing firms (JC Penney, Abercrombie and Fitch, Nike and Ralph Lauren) and two food companies (Starbucks and Yum! – which owns brands like Taco Bell and Pizza Hut). To take the example of Starbucks, its UK sales didn’t suffer any long-term damage from news of its creative tax accounting, so it’s unlikely to be too worried about the PR implications of its unfair pay scales – perhaps the average consumer, like Swiss voters, doesn’t really care. I, however, am happy to boycott all six until their executives explain just how they are 800 times more valuable than their average employee.
Here is a list of the top ten companies with the highest CEO to employee pay ratios, according to Bloomberg’s research:
JC Penney Co. 1795:1
Abercrombie & Fitch 1640:1
Simon Property 1594:1
Oracle Corp: 1287:1
CBS Corp 1111:1
Ralph Lauren 1083:1
Discovery Communications: 833:1
Yum! Brands Inc 819:1