As public companies in Tampa Bay and elsewhere hold their annual shareholder meetings in the coming weeks, investors are keeping their eyes on a newly disclosed measure: how the CEO’s pay compares to the pay of the median worker at the company.
The new measure gives shareholders more information to consider as they cast “say on pay” advisory votes on executive compensation, which generally has been growing at a faster pace than rank-and-file employee pay. Most companies say increased executive pay results from improved corporate performance.
Critics say it is an indication of widening income inequality in the United States.
The CEO-to-worker pay ratio is raising questions about recruiting and retaining talent in a highly competitive workforce environment, and boards of directors are monitoring it as they think about pay packages going forward. Their decisions ultimately could impact the broader economy. Public companies often are large employers and hikes in employee pay designed to lower the gap between CEO and worker pay would give workers more discretionary income to spend, but also could raise the cost of goods sold. Privately owned companies are exempt from disclosure but might feel pressured to follow their public counterparts.
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