Widening CEO-to-worker pay gap in the United States and the UK: Concerns about income inequality and fairness

The gap between CEO pay and worker pay in the United States and the UK continues to widen, raising concerns about income inequality and fairness. According to an analysis by Common Dreams and the Institute for Policy Studies (IPS), the median compensation of chief executives at major U.S.-listed firms increased by 12.6% to $16.3 million in 2023, while private sector workers' pay only increased by 4.1% last year. This has widened the CEO-to-worker pay gap to nearly 200-to-1. The analysis also found that the median gap between CEO pay and median employee pay was 196, up from 185 in 2022. The rise in CEO compensation primarily came from an increase in stock awards [92e62f8a].

In the UK, a similar trend is observed. An analysis of the annual reports of 58 firms in the FTSE 100 shows that top chief executives earned a combined £329.4 million in pay and perks for 2023, up from £286.8 million in 2022. The average fatcat’s package jumped from £4.86 million to £5.58 million. The top earner in 2023 was Pascal Soriot from AstraZeneca, with a pay of £16.85 million, 482 times the £34,963 earned by the average full-time UK worker. Charles Woodburn of BAE Systems earned £13.4 million, and Erik Engstrom of RELX earned £13.6 million. The analysis was compiled by the Mirror and the High Pay Centre [1fef78cc].

The widening CEO-to-worker pay gap has sparked concerns about income inequality and fairness. Senator Bernie Sanders has been leading federal legislative efforts to address this issue. The analysis by Common Dreams and IPS highlights the need for measures to reduce the pay gap and ensure that workers receive their fair share of company profits [92e62f8a].

In the United States, the compensation for top executives at the largest companies has increased by approximately 13% in the past year, according to an analysis by Associated Press (AP) and Equilar. This contrasts with the mere 4.1% rise in wages for the workers at the same firms. The study compared the pay of more than half of the CEOs from the S&P 500 with the average workers at those companies. At half of the companies studied, it would take an average worker nearly 200 years to earn what a Chief Executive Officer (CEO) makes in a single year. The analysis also revealed that several companies have begun linking executive pay raises to company performance. The highest earner was Jensen Huang of NVIDIA, with a total compensation of about $162 million. The study also provided data on female CEOs, with the highest-paid female CEO being Lisa Su [2fde78fc].

The widening CEO-to-worker pay gap and the disparity in wage growth have raised concerns about income inequality and fairness in both the United States and the UK. These trends highlight the need for measures to address the pay gap and ensure that workers receive their fair share of company profits. The analysis by Common Dreams and IPS emphasizes the importance of reducing income inequality and promoting fairness in the distribution of wealth [92e62f8a].

Executive salaries at major US corporations have risen nearly 40% between 2017 and 2023, with the average annual compensation for a CEO at an S&P 500 company reaching $16.3 million. Shareholders have not been pushing back against these pay increases, with only 0.5% of executive pay packages being rejected at annual meetings this year. Shareholders tend to vote down plans after poor performance or stock price performance. The Dodd-Frank Act requires companies to submit their executive pay packages to a shareholder vote every three years, but the votes are non-binding. The ratio between CEO compensation and the median salary has risen to 196 times in 2023. Bills proposed to limit CEO pay have not gained traction in the US House of Representatives. The idea of 'say on pay' has led companies to turn to consulting firms like Institutional Shareholder Services (ISS) and Glass Lewis for guidance on CEO pay [543f4a47].

Meanwhile, Waffle House, a popular restaurant chain in the United States, has announced an increase in pay for its workers after facing pressure from labor organizers. CEO Joe Rogers III stated that base pay would rise to at least $3 per hour in June and gradually increase to at least $5.25 per hour by June 2026. The wage increases will be funded by higher menu prices. Waffle House, which has 2,000 restaurant locations across the U.S., has been the target of strikes organized by the Union of Southern Service Workers, a labor group affiliated with the Service Employees International Union. The strikes aimed to demand higher pay and other improvements for Waffle House workers. In addition to the wage increase, Waffle House will also introduce tenure bonuses and premiums for working later shifts [be7ffb6c].

A recent study suggests that American chief executives aren't getting better - they're getting worse. The study, 'Have CEOs Changed?', found that the average chief executive has 'lower overall ability' than predecessors. This raises concerns about the increasing CEO pay in the United States and questions the justification for such high compensation packages. The study's findings challenge the notion that higher pay is linked to higher performance and ability [25ce5a17].

The article 'Richest Presidents By Salary 2024' explores the top ten highest-paid world leaders in 2024, including Singapore Prime Minister Lawrence Wong with an annual salary of over $1.6 million, Hong Kong Chief Executive John Lee Ka-chiu earning approximately $695,000 annually, Switzerland President Viola Amherd with an annual salary of $530,000, United States President Joe Biden earning $400,000 annually, Australia Prime Minister Anthony Albanese receiving an annual salary of $390,000, Germany Chancellor Olaf Scholz earning $367,000 annually, European Union President Ursula von der Leyen with a salary of $364,000, Austria Chancellor Karl Nehammer earning $307,000 annually, Canada Prime Minister Justin Trudeau receiving a salary of $292,000 annually, and New Zealand Prime Minister Christopher Luxon with a salary of $288,000 annually. The article also discusses the financial backgrounds of U.S. presidents and the intersection of wealth and leadership [f0463143].