Three area companies — Cerner, Garmin and H&R Block — showed up in a “sneak peak” preview of the pay differences between workers and CEOs.
None of the local businesses landed near the top of the rankings in a study by job and recruiting company Glassdoor. And the numbers Glassdoor used weren’t the same data companies will use to make official comparisons under federal rules starting in 2018.
But the ranges were broad as Glassdoor measured CEO compensation against what it called median employee pay — its estimate of the pay level at which half the workers at the company earn more and half earn less.
The biggest CEO-worker pay gap surfaced at Discovery Communications, which owns popular U.S. cable channels including Discovery Network, TLC and Animal Planet. Its CEO, David M. Zaslav, made $156 million, or 1,951 times the $80,000 median employee pay at the company, Glassdoor found.
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Chipotle Mexican Grill came in second with a CEO pay ratio of 1,522-to-1. CVS Health was third at 1,192-to-1.
Garmin, the Olathe-based maker of GPS and other devices, landed near the other end of the rankings. CEO Clifton A. Pemble earned 24 times the $72,491 median employee pay at the company, Glassdoor reported. Among 441 companies ranked, Garmin stood 431st.
H&R Block was 135th on the list. CEO William Cobb earned 211 times the $35,488 median pay at the Kansas City-based tax preparation company, Glassdoor said.
Cerner CEO Neal Patterson earned 102 times the $65,000 median pay at the company, Glassdoor said. The North Kansas City-based company ranked 331st.
Glassdoor called the study a “sneak preview” into the CEO pay ratio disclosure rule the Securities and Exchange Commission approved this month. The rule will require the nation’s 4,000 publicly traded companies to disclose the ratio of the CEO’s annual total compensation to the median compensation of the company’s employees.
The rule applies to reporting for financial statements for 2017 and later, meaning the first official glimpse of the numbers will come in spring 2018.
Although Glassdoor is not the first to publish estimated CEO pay ratios, the company said it had collected “thousands” of salary reports over the years from employees to encourage pay transparency in the workplace, giving it a “unique window into worker pay.”
The company based its analysis on 441 large, publicly traded companies listed in the Standard & Poor’s 500 index.
It’s unclear whether the various studies on CEO pay have influenced public or shareholder opinion, experts say. But the ratio alone may not say everything about the pay difference, said Robert Jackson Jr., a professor at Columbia Law School.
Investors should also look at the compensation ratio in relation to other information, such as performance disclosures, he said.
“Most Americans don’t mind so much when CEOs make a lot of money if they perform,” Jackson said. “What bothers them is if they get paid when they fail, and this ratio alone doesn’t tell you anything about that.”
Glassdoor’s information is not exactly what the SEC will require. Though Glassdoor used SEC proxy statement filings to determine CEO compensation information, which is publicly disclosed, the company relied on its employee surveys to calculate total compensation for employees. Only companies with 30 or more Glassdoor employee surveys were included on its list.
Workers often underreport bonuses and stock options in these surveys, since many do not know or do not remember their non-salary compensation, Glassdoor said. This means their total pay is probably underreported, which can cause the reported pay ratio to be higher than it is.
The salary reports also might not represent the full distribution of jobs at the company, Glassdoor said, which makes it impossible to ensure that all positions are represented when calculating median pay.
CEO pay versus worker pay
Glassdoor reported these totals for companies in the region as it measured CEO compensation as a multiple of worker pay at the companies. At 100, the ratio shows the CEO made 100 times the worker pay level used in the comparison.
Median worker pay
Leggett & Platt