The average compensation of S&P 500 CEOs reached $14.5 million in 2018, a $500,000 raise from the previous year, according to the AFL-CIO's annual Executive Paywatch report released Tuesday.
The report said the average S&P 500 CEO makes 287 times more than the average worker.
The labor organization has been tracking executive compensation for 20 years, "and this year is no different," said AFL-CIO Secretary-Treasurer Liz Shuler on a press briefing call. Average workers' wages have not kept up with inflation, and "we believe this disparity represents a fundamental problem with our economy," she said.
AFL-CIO officials said on the call that the recent tax cut "only made things worse" by reducing the amount of taxes paid by corporations, which creates an opportunity for stock repurchases. "Stock buybacks are another loophole that executives are taking advantage of to line their own pockets. We are supporting federal legislation that would actually ban stock buybacks," Ms. Shuler said.
The AFL-CIO has also petitioned the Securities and Exchange Commission to look deeper into what it said was $1 trillion in stock buybacks by companies in 2018, and to repeal a safe harbor for those. Through rules first adopted in 1982 and last updated in 2003, the SEC has offered corporate executives a safe harbor from securities-fraud liability if the pricing and timing of buyback-related repurchases meet certain conditions.
Brandon Rees, deputy director of corporations and capital markets at AFL-CIO in Washington, said on the call that dividends and buybacks together exceed corporate earnings. "If companies are not reinvesting, that hurts the long-term performance and that's not good for shareholders."
