Executive Excess 2023 Sarah Anderson
Introduction:
And yet top executives seem to have little trouble finding enough to enrich themselves and wealthy shareholders. In 2021 and 2022, S&P 500 corporations spent record sums on stock buybacks, a maneuver that artificially inflates the value of a company's stock — and CEOs' stock-based pay.
All employees contribute to company profits. But instead of broadly sharing the wealth, companies are using a once-illegal form of market manipulation to make those at the top of the corporate ladder even richer.
This 29th annual Executive Excess report takes an in-depth look at the 100 S&P 500 corporations that had the lowest median worker pay levels in 2022, a group we've dubbed the "Low-Wage 100." For each of these firms, we report the total compensation and personal stock holdings of CEOs, the CEO-worker pay gap, and the overall outlays for stock buybacks.
We also reveal how taxpayers are enriching ― through federal contracts ― the majority of the Low-Wage 100. And we conclude with the most comprehensive available policy menu for achieving a fair corporate compensation system.
The full report — complete with comprehensive findings, recommendations, and methodology, along with data for each of the 100 companies we studied — is available here. A summary follows.
Key Findings
1. The CEO-worker pay gap at the Low-Wage 100 averaged 603 to 1 in 2022.
- Chief executives in this group raked in $15.3 million on average in 2022, while median worker pay averaged just $31,672.
- Live Nation Entertainment had the fattest CEO paycheck and the widest pay gap. Michael Rapino hauled in $139 million, 5,414 times as much as his firm's median of $25,673.
2. The Low-Wage 100 have spent more than $340 billion on stock buybacks since 2020.
- Between January 1, 2020 and May 31, 2023, 90 of the Low-Wage 100 reported combined stock buyback expenditures of $341.2 billion. This maneuver artificially inflates executive stock-based pay and siphons funds from worker wages and other productive investments.
- Lowe's led the buybacks list, spending $34.9 billion on share repurchases over the past three and a half years. In 2022 alone, Lowe's spent more than $14.1 billion on buybacks — enough to give every one of its 301,000 U.S. employees a $46,923 bonus.
- Home Depot came in second, with $28.9 billion in stock buybacks since January 2020, and Walmart ranks third, with $23.9 billion.
3. During their stock buyback spree, Low-Wage 100 CEOs' personal stock holdings increased more than three times as fast as their firms' median worker pay.
- The CEOs of the 90 low-wage S&P 500 companies that have spent funds on buybacks since 2020 have amassed approximately $14.9 billion worth of their company stock.
- At the 65 buyback companies where the same person held the top job between 2019 and 2022, the CEOs' personal stock holdings soared 33 percent to an average of $184.7 million. Median pay at these firms rose only 10 percent to an average of $31,972 (not adjusted for inflation).
- FedEx CEO Frederick Smith has the largest stockpile in the Low-Wage 100. His personal holdings have grown 65 percent to more than $5 billion since January 2000. By contrast, FedEx median worker pay fell by 20 percent to $39,177 (including $9,267 in health benefits) between 2019 and 2022.
4. Over half of the Low-Wage 100 receive taxpayer-funded federal contracts.
- Of the 100 companies in our sample, 51 received federal contracts worth a combined $24.1 billion during fiscal years 2020-2023. These low-wage federal contractors spent nearly $160 billion on stock buybacks over the course of these years.
- In 2022, the average CEO pay in this low-wage contractor group stood at $12.7 million, 56 times as much as the salary of a Biden administration cabinet secretary. This group's CEOs averaged 438 times their $34,550 median worker pay.
Recommendations
Policy solutions for runaway CEO pay are gaining support.
Public outrage over executive excess is growing across the political spectrum. Policymakers have begun taking serious steps to respond. They include…
- Stock buybacks taxes and restrictions: In the 2022 Inflation Reduction Act, Congress passed a 1 percent excise tax on CEO pay-inflating stock buybacks. President Biden proposed quadrupling this tax in his 2023 State of the Union address. Biden has also included a proposal in his federal budget plan that would ban top executives from selling their personal stock for a multi-year period after a buyback, preventing CEOs from timing share repurchases to cash in personally on a short-term price pop they themselves artificially created. A Senate bill, the ALIGN Act, would do just that.
- Federal contractor incentives: In 2022, the Department of Commerce announced plans to give priority in the awarding of new CHIPS subsidies for domestic semiconductor manufacturing to firms that do not engage in any stock buybacks. The administration has applied a number of other pro-worker conditions on federal contracts, but federal agencies could go much further to wield the power of the public purse against inequality. The Patriotic Corporations Act could serve as a model. This bill would grant preferential treatment in contracting to firms with pay ratios of 100 to 1 or less, among other benchmarks, including neutrality in union organizing campaigns.
- Excessive CEO pay taxes: Laws to hike corporate taxes on companies with wide CEO-worker pay gap are now raising revenue in two major cities, San Francisco and Portland, Oregon. The more recent of the two taxes, San Francisco's "Overpaid Executive Tax," became effective on January 1, 2022. In May 2023, city officials announced that they now expect the tax to bring in about $125 million per year, a higher return than originally expected. San Francisco's executive tax has also proved more resilient than other local revenue sources. Legislation similar to San Francisco's has been introduced in the U.S. House and Senate and came into play during the Build Back Better negotiations. Higher tax rates on companies with wide CEO-worker pay gaps create an incentive to both rein in executive pay and lift up worker wages, all while generating significant new capital for vital public investments.
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