The debate over CEO pay is decades long. Boards believe their chief executive officers have skills that cannot be replaced. Shareholders and workers believe that annual compensation, which can go into the tens or hundreds of millions of dollars, can never be justified, mainly if the company’s workers are paid very little. (These are America’s most trusted food and drink brands.)
Recently, shareholders have been able to vote on executive pay. However, these votes rarely succeed in changing pay. Investors and shareholders did have a small victory in 2017. The U.S. Securities and Exchange Commission began to require that CEO pay be compared to the median compensation of those who work at the companies they run. CEOs at many public corporations are paid hundreds of times more than their employees, based on these median figures. This information is put into filings made to the SEC.
Based on 2022 data provided so far for S&P 500 companies, according to AI-driven SEC data company MyLogIQ, McDonald’s CEO Chris Kempczinski made 1,224 times more than the median compensation of his workers. The pay for workers was $14,521, while Kempczinski made $17,770,514. McDonald’s said in its proxy that it is committed to a pay-for-performance culture. It appears that is not so for hourly workers. Entry-level jobs at the fast-food company pay between $11 and $17 an hour. The federal government reports that, for an individual, the pay at which someone is below the poverty level is $14,580 per year.
McDonald’s pays people low wages because it can. Most people who work at its locations do not have the education to work for companies that pay more. Some older workers use the income to add to Social Security.
Get Our Free Investment Newsletter
The argument will persist indefinitely about whether CEOs should make 1,000 times or more than their workers do. McDonald’s would argue that its profits would be squeezed if it pays more.
The company made $1.8 billion in profits in the most recent quarter on revenue of $5.9 billion. The fast-food chain could increase pay by a few dollars an hour and still make large sums. Its board would argue that lower profits would hurt the stock price.
Is Chris Kempczinski worth 1,200 times more than his workers are? It depends on who is asking.
Data provided by AI-driven data firm MyLogIQ, which collects and distributes SEC information.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Source: Read Full Article