Social Governance

Study: CEO-Worker Pay Gap Jumps in 2021 at U.S. Companies

Published on: 7 June 2022 06:00 PM
by KnowESG
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According to a report by the Institute for Policy Studies, the pay disparity between workers and CEOs at 300 publicly traded U.S. companies with the lowest median income increased in 2021.

According to the report, the average difference was 670 to 1, up from 604 to 1 the previous year, with 49 organisations having ratios exceeding 1,000 to 1. The group's average CEO salary increased by $2.5 million to $10.6 million, while the median worker's pay increased by $3,556 to $23,968.

The findings will give investors who advocate for social justice as part of their environmental, social, and governance (ESG) agenda fresh ammunition.

This year, American corporations are facing an unprecedented surge of ESG-related shareholder resolutions, with the treatment of workers being one of the most commonly voiced topics.

Sarah Anderson, Global Economy Project Director at the IPS, said:

"During the pandemic, low-wage workers have demonstrated how essential they are to the functioning of our economy. With profits rising in 2021, corporations had an opportunity to make a big leap towards greater pay equity."

The analysis discovered that median worker pay failed to keep pace with the 4.7 per cent average annual rate of inflation in the United States at 106 of the companies studied. During that time, 67 corporations spent $43.7 billion on share buybacks, enhancing CEOs' stock-based compensation.

As a result, an increasing number of workers are taking matters into their own hands and looking for better compensation, working conditions, or work-life balance by changing jobs, a movement dubbed "The Great Resignation."

According to a global survey conducted by consultants PwC in March, one out of every five workers is "very" or "very likely" to change jobs in the next 12 months.

Investors are paying more attention to how corporations treat their employees as a result of the COVID-19 pandemic, yet, as evidenced at Amazon's recent annual meeting, many are wary of challenging management on such concerns.

Source: Reuters

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