Executive pay cuts taken to show solidarity with workers furloughed by the COVID-19 crisis "are mostly window dressing," AFL-CIO Secretary-Treasurer Liz Shuler said Wednesday as the labor organization released its annual Executive Paywatch report.
In 2019, U.S. executives made 264 times what their average workers did and averaged $14.8 million in total compensation compared to $41,442 for the average worker, the report found. While the average ratio was 264 to 1, for 44 company CEOs, the ratio was 1,000 to 1.
That was down from the 2018 average S&P 500 company CEO-to-worker pay ratio of 287 to 1, but AFL-CIO officials expect the drop to be short-lived. The figures were reported before the COVID-19 pandemic led to widespread furloughs and job losses.
Union officials also point out that base salaries account for less than 8% of total compensation for CEOs of S&P 500 companies, with the bulk coming through equity awards, which in 2020 increased 52% over 2019. Those payments do not show up until 2021.
"The real story in executive compensation was that companies ramped up their equity awards to senior executives at the beginning of this year," Ms. Shuler said during a media call, warning that the disparity between executives and workers is likely to grow, as workers lose income or unemployment benefits and the stock market declines. "This kind of greed going on during a pandemic ... is outrageous," she said, calling it "very familiar territory" last witnessed during the 2008-2009 financial crisis.
According to the report, 20 of the 44 companies with pay ratios of 1,000 to 1 furloughed "substantial portions of their workforce" when COVID-19 hit, she said. "Working people are being treated as expendable."
While many company executives stood out for their generous pay ratios, Ms. Shuler recognized others, including the heads of Williams-Sonoma and AMC Entertainment Holdings, for adjusting their pay downward during the crisis.
The AFL-CIO is pushing for Senate passage of a relief package passed by the House, the HEROES Act. It would extend unemployment insurance for workers, and prevent companies that pay more than $1 million to executives from getting refunds of previously paid corporate income taxes, a provision contained in the first coronavirus relief package.