Monday, July 12, 2010

How Many Workers Can You Hire for the Price of One CEO?

money struggleNot all CEOs are as generous as Apple's (AAPL) Steve Jobs. The company's founder makes a mere $1 a year, while a starting sales associate at one of his Apple stores makes more than $31,200. But Jobs is an anomaly.

Even though the gap between executive and entry-level worker pay has shrunk ever so slightly in the past couple of years, it's still not unusual for the CEO of a large public company to earn more per day than some of his employees earn over the course of an entire year.

Interestingly, some industries have much larger pay gaps than others. In technology, pharmaceuticals and manufacturing, the differences between worker and CEO salaries tend to be smaller, thanks to higher worker pay. In retail and other consumer-facing industries (where employees work directly with consumers to sell a good or provide a service), the gap tends to be bigger, due in part to the low pay of entry-level workers.

We looked at more than a dozen companies where the difference between what the CEO makes and what an entry-level worker makes is unusually large. We obtained the CEO total compensation figures (which include cash, bonuses, stock options and any other perks -- like say a corporate jet), from the most recent proxy statements. Employee salary figures, many of them based on hourly wages, came from the companies, as well as from interviews we conducted with unions and workers themselves.

One CEO stands out on the list. Jamie Dimon, the CEO of JPMorgan (JPM), made "only" $1.3 million largely because of pressure on Wall Street CEOs to keep management compensation low in response to the financial crisis and government bailout. What may be forgotten is that Dimon made over $35 million in 2008 as the global credit system was falling apart along with the JPMorgan stock price.

Don't feel so bad for Jobs, either. He's incredibly wealthy thanks to his Apple stock holdings.

To get a sense of how the CEO of a company you regularly do business with pays his or her employees compared to themselves, we've broken it down for you below:

CVS Caremark (CVS)
Thomas M. Ryan: $30.4 million (2009 Compensation)
Starting Cashier: $8/hour, $20,800/year
One CEO = 1,461 entry-level employees

AT&T (T)
Randall Stephenson: $29.2 million (2009 Compensation)
Starting Sales Associate: $10/hour, $26,000/year
One CEO = 1,123 entry-level employees

The Walt Disney Co. (DIS)
Robert Iger: $29 million (2009 Compensation)
Disneyland Hotel Housekeeper: $10/hour, $26,000/year
One CEO = 1,115 entry-level employees

McDonald's (MCD)
James A. Skinner: $17.6 million (2009 Compensation)
Starting Cashier: $7.25/hour, $18,850/year
One CEO = 933 entry-level employees

See full article from DailyFinance:

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