Two-thirds of Americans believe companies are doing a poor job of managing the wealth gap between CEOs and rank-and-file workers, according to early results from a poll conducted by Gallup and Bentley University.
The results have not yet been officially released, but the findings so far show for the third year in a row that an overwhelming majority of Americans believe that narrowing the pay gap between CEOs and average workers is not only an important issue, but also an issue that companies are failing miserably to address.
“CEO pay is a disgrace. It’s horrible. And it greatly undermines confidence in our institutions,” said Nell Minow, vice chairman of ValueEdge Advisors. CNNwho first reported on the study’s findings.
In 2023, the average CEO of an S&P 500 company earned 196 times as much as regular workers, up from 185 in 2022. About 83% of Americans told pollsters that it was somewhat or extremely important that companies try to close the yawning gap between average executive pay and compensation for average workers. At the same time, only 13% of respondents said companies are doing a good job of keeping CEO pay in check.
But even though public opinion on CEO pay seems overwhelming – and consistent, both year-over-year and demographically – it doesn’t seem to be having much impact.
Average pay packages for S&P 500 CEOs rose nearly 13% last year, while wages and benefits for private sector workers rose just over 4%, AP’s annual compensation survey shows. The results of the study, analyzed for the AP by EquivalentResearch found that average pay for CEOs rose to $16.3 million, including cash and stock-based compensation, while the average employee at an S&P 500 company earned $81,467.
“Instinctively it doesn’t seem fair. How can a CEO earn 196 times as much as the average worker?” Cynthia Clark, professor of management at Bentley University, explained CNN.
The new findings also showed that political party affiliation was not a major factor in how Americans viewed the pay gap between CEOs and employees. In the survey, 96% of Democrats said closing the pay gap was important. While Republicans were not as fervent, they still overwhelmingly said the issue was important (66%).
CEO pay is “an issue that cuts across the political spectrum,” says Sarah Anderson, director of the Institute for Policy Studies’ Global Economy Project. Fortune. In fact, she said this could even be a factor behind the resurgence of organized labor activity in 2023, as dissatisfaction with corporate profits being funneled to the top of the wage scale boiled over in major unions like the United Auto Workers.
“As we emerge from the pandemic, the idea that one person in a corner office is worth hundreds of times more than frontline workers, many of whom did essential work to keep our economy going, is simply not something people will believe anymore,” she said. Anderson. told Fortune.
The Gallup-Bentley findings are not the first poll this year to show bipartisan disdain for CEO pay.
A poll in April by Data for Progress asked respondents how they would feel about implementing legislation that increases taxes on companies that pay their CEOs at least 50 times the average employee wage. The results showed overwhelming approval from both Republicans and Democrats.
Bills like the one surfaced by pollsters have been introduced in both chambers of Congress before, including a bill introduced this year by Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, called the CEO Excessive Compensation Act.
But Anderson said this type of legislation has stalled because corporate lobbyists continue to hammer the table that CEOs of major companies are almost solely responsible for shareholder value. The talent pool for top executives is incredibly competitive, and if they don’t pay, CEOs will move to other companies that do.
“I think most Americans are really seeing through that argument now and understanding that employees up and down the pay scale contribute value to these companies,” Anderson said. “It says a lot about who really has a strong voice in Washington. The corporate lobby groups that still promote that outdated idea still have a lot of say.”
This all comes as Tesla shareholders today approved the largest pay package in history for CEO Elon Musk, at $56 billion.
“Shareholders are the group that should decide compensation packages,” said Bentley professor Cynthia Clark Fortune in an email. “The big concern with Musk’s award is not what he will do if he doesn’t get it, as has been widely discussed in the news, but what will happen to other CEOs and pay ratios if he does get it.”
Anderson said Fortune that Musk’s compensation package offered an interesting look at other mechanisms for controlling CEO compensation. In January, a Delaware judge vetoed Musk’s payout over corporate governance issues, and several major institutional investors, including two public pension plans in California, spoke out against the deal ahead of today’s vote.
“It’s encouraging to see some major institutional investors taking a stand against this obscene pay package that was approved by his brother and his divorce lawyer, and against those other people who are so close to the executives,” Anderson said. “But there is a very big hurdle to obtaining majority votes against corporate pay packages.”
