AFL-CIO Secretary-Treasurer Shuler unveiled the “1000-to-1 Club Pay Ratio Companies that Furloughed Workers in 2020.” Calls for immediate passage of the HEROES Act.
The imbalance in the country’s economy between the pay of CEOs and working people continues to be a problem, confirmed this year’s AFL-CIO Executive Paywatch report, which was presented this morning by AFL-CIO Secretary-Treasurer Liz Shuler.
The Executive Paywatch website, the most comprehensive, searchable online database tracking CEO pay, shows that in 2019, CEOs of S&P 500 companies received, on average, $14.8 million in total compensation. The average S&P 500 company CEO-to-worker pay ratio was 264-to-1.
According to this year’s report, S&P 500 CEO’s pay has increased, on average, $3.4 million over the past 10 years. Meanwhile during the same period of time, the average U.S. production and nonsupervisory worker’s pay increased just $8,360. From 2018 to 2019, the average production and nonsupervisory worker received barely more than a $1,500 raise, bringing their total pay to $41,442.
The data presented is particularly striking given that the COVID-19 pandemic has resulted in the highest unemployment levels since the Great Depression. Nearly 15% of workers were unemployed in April of this year compared to a high of 10% unemployment after the 2008 Wall Street financial crisis.
During the report’s release, Secretary-Treasurer Shuler pointed to the “1000-to-1 Club Pay Ratio Companies that Furloughed Workers in 2020,” a new feature within the website that shows the 20 companies with CEO-to-worker pay ratios over 1,000-to-1 that have furloughed substantial portions of their workforces due to shutdowns related to COVID-19.
“With the COVID-19 shutdowns earlier this year, we saw many CEOs take salary cuts as a token of their solidarity with furloughed workers. While these CEO salary cuts made for good headlines, they are mostly window dressing. Base salary makes up less than 8% of total compensation for CEOs of S&P 500 companies. Most CEO pay is in equity awards. The real story in executive compensation was that companies ramped up their equity awards to senior executives at the beginning of this year,” said Shuler during the press call. “Meanwhile, millions of working people have been furloughed or laid off due to COVID-19 related shutdowns. This disparity represents a fundamental imbalance in our economy. Working people are being treated as disposable employees. Now these cast-off workers, as a result of COVID-19, are at risk of having their unemployment benefits cut.”
The clothing retailer Abercrombie & Fitch shows exactly how this COVID-19 CEO pay cut ruse works. When announcing workforce furloughs of its U.S. retail workforce related to COVID-19 on April 6, 2020, Abercrombie & Fitch also announced that it cut its CEO Fran Horowitz’s salary by 33%.
But just two weeks earlier on March 24, 2020, the Abercrombie & Fitch CEO received an award of more than 240,000 shares of restricted stock. These equity awards were nearly three times the amount that had been granted at the same time during the previous year. Abercrombie & Fitch’s stock price has since increased 20% from its March low.
These COVID-19 CEO stock grants will not show up in the pay data until next year. But looking back at 2019, Abercrombie & Fitch had the highest disclosed ratio of CEO-to-worker pay of any public company: 4,293-to-1. Abercrombie’s CEO received $8.4 million in total compensation compared to the company’s median worker who received less than $2,000 in compensation.
Shuler added that it is critical for the Senate to pass the HEROES Act, legislation that will provide the relief that working families need. It would extend unemployment insurance as jobless rates skyrocket and incentivize employers to keep workers on payroll by enhancing the employee retention tax credit. So far, the legislation has been sitting for more than 70 days on Senate Majority Leader Mitch McConnell’s desk.
“We are demanding that the Senate pass the HEROES Act and provide the relief that working families need. The HEROES Act will extend unemployment insurance while keeping companies that paid more than $1 million in executive pay from getting refunds of previously paid corporate income taxes,” concluded Shuler.
Contact: Gonzalo Salvador (202) 637-5018