The Fortune 100 List Is an Indictment of Executive Greed
Americans are overwhelmingly opposed to runaway executive pay, but CEOs are making exorbitant amounts of money compared to their workers.
by Eric Gardner, More Perfect Union
Earlier this year, six Democratic members of Congress introduced a bill to increase the corporate tax rate on companies that paid their executives a lot and their workers a little. If passed, the Tax Excessive CEO Pay Act would place a progressive tax on companies whose CEO-to-worker ratio is greater than 50:1.
You can count the number of companies on this year’s Fortune 100 list that would pay no tax under the proposed legislation nearly on one hand.
They are:
Dell Technologies – 41:1
Amazon.com – 31:1
Alphabet - 29:1
Berkshire Hathaway 5:0
Fannie Mae – 4:1
Freddie Mac – 4:1
Tesla – 0:0
Of those seven companies, Fannie and Freddie are quasi-government mortgage entities, so they don’t count. Amazon is included only because of the single-year focus of this exercise. Last year, CEO Andy Jassy was compensated about $1.3 million, a modest amount for the CEO of the second-largest company on the list, but if you rewind two years, his compensation surpassed $200 million—a big difference. The same thing holds for Alphabet.
And Tesla. This year’s Tesla’s CEO-to-worker pay ratio was 0. That’s because since 2019, CEO Elon Musk took no salary. Shareholders just approved a $56 billion payday for Musk, which means that next year, Tesla’s CEO-to-worker pay ratio will be around 1,200,000:1.
That leaves just two full-fledged companies on the list that wouldn’t pay a tax: Dell Technologies and Berkshire Hathaway.
CEO pay packages are often tied to meeting certain financial and operational metrics. The question is, are these metrics correlated and consistent with a profitable and sustainable company?
Earlier this week, for example, Boeing CEO Dave Calhoun — due for a more than $32 million payout this year — was grilled by a Senate panel over the company’s catastrophic safety and transparency record. Most of that is from meeting certain performance metrics such as revenue and cash flow targets, but the company hasn’t even turned a profit during his four-plus year tenure as CEO.
“What is it you get paid to do exactly?” Republican Sen. Josh Hawley asked Calhoun.
Even former major executives are starting to notice. “This is going to cause a further split on our country between the haves and the have-nots,” said Bill George, the former CEO of Medtronic, and the guy who oversaw Exxon’s executive compensation plan a decade ago.
And the evidence shows he’s right. Here are some stats on the issue:
The Economic Policy Institute estimates that CEO pay increased by 1,209 percent between 1978 and 2022.
In 2023, the median CEO at a major U.S. company was paid $16.3 million, a 12 percent increase from the previous year.
That increase was over three times the wage increases of the median worker.
A 2018 study found the median annual CEO compensation across Europe was about 5.8 million euros — meaning this is a uniquely American problem, like student loan debt or ultra-processed food.
With this in mind, let’s dig into the Fortune 100 and see what it says about the American worker.
The Fortune 100 is strikingly unequal
The median Fortune 100 CEO made about $21.1 million last year, while the median worker took home a little more than $80,000. That breaks down to a ratio of 320:1.
The massive disparity is driven primarily by the rise of stock-based compensation, which means company ratios can swing from one extreme to another depending on when the stock award is given; see Amazon and Tesla above).
Not all Fortune 100 companies have to disclose their CEO-to-worker pay ratio. The Dodd-Frank Act, which requires disclosure, only applies to companies that issue and sell stock. Mutual insurance companies, like State Farm, are owned by their policyholders and are exempt. (That’s also why the totals for some of the graphs below don’t add up to 100.)
Companies disclose their pay ratios every fiscal year. Different companies have different fiscal years. The bulk of proxy filings happen in the Spring, so this list looks at last year's pay.
Energy and information technology were the most equitable industries in terms of pay ratio last year. The energy sector includes corporations like Chevron, Exxon, and other oil and natural gas companies. The Information technology category includes Alphabet, Meta, and Microsoft.
The most unequal industry within the Fortune 100 may be American big-box retail. T.J. Maxx, Target, and Walmart made the list’s top 10, while Nike has a huge retail footprint as well
The ten major retailers on the list, Albertsons, Best Buy, Costco, Home Depot, Kroger, Lowe’s, Publix, Target, T.J. Maxx, and Walmart, combined to record over $62 billion in profit last year. The median worker took home around $31,000.
Meanwhile, the median retail CEO's compensation was $16.5 million, good enough for a 522:1 ratio.
What are the best industries for workers and executives?
The two best sectors for workers are information technology and energy. Companies from those two sectors claim 9 of the top 10 spots. Across the sectors, energy workers earn over $166k a year, more than double the median worker. Meanwhile, IT workers took home about $97k.
The lone finance company to make the top ten for workers was Fannie Mae, the government-sponsored enterprise that dominates mortgage financing in the U.S.
Meanwhile, executive pay was fairly evenly distributed. Six different sectors had executives in the top ten.
The top ten highest-paid executives in the Fortune 100 took home $446 million in compensation.
The top ten lowest-paid executives combined to earn $28 million.
Stopping runaway executive pay is popular
83 percent of Americans agree: it’s time to close the gap between executives and workers.
The Tax Excessive CEO Pay Act is progressive, meaning the higher the ratio, the more taxes a company would pay.
This year, 13% of the Fortune 100 would be taxed an additional 5 percent, the maximum amount. The bill’s sponsors estimate the act could raise $150 billion over ten yea