Out of the 19 public companies that are based in or have significant operations within Rhode Island and have filed proxy statements recently, 14 of them have CEOs with salaries at least 100 times larger than the median salary of its employee base.
CVS Health Corp. President and CEO Larry J. Merlo made $12.2 million in compensation in 2017, which is 320 times more than the median $38,372 salary a CVS employee made in that time, the largest such ratio of a Rhode Island-based company.
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The largest disparity between the CEO and median salaries belonged to Walmart Inc., whose CEO Doug McMillon made $22.8 million, compared with the median employee salary of $19,177, leaving a ratio of 1,188 to 1.
At Textron Inc., Chairman, President and CEO Scott C. Donnelly made $14.8 million in total compensation last year, which is 165 times more than the median salary of the company’s employees at $90,025.
Employees at Hasbro Inc. had a median salary of $74,207 last year. With total compensation of $11.9 million, Chairman and CEO Brian Goldner made 160 times more than the median of the company’s employees.
On the other end of the scale, AstroNova Inc. in West Warwick had the lowest pay ratio in the state at 13.5 to 1. The median employee salary was $51,991 in fiscal 2018, while Gregory A. Woods, company president and CEO, made $703,224 – the only executive to make less than $1 million of the 19 researched.
The ratio is a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and 2018 is the first year that the data has been published. Still, the data are not crystal clear.
The U.S. Securities and Exchange Commission allows companies to exclude up to 5 percent of non-U.S. employees from countries where data privacy laws or regulations make it challenging to determine median pay. Walmart, for instance, excluded slightly fewer than 90,000 such employees.
Companies, particularly retail, included salaries from part-time, full-time, temporary and seasonal employees in coming up with a median pay number, as the SEC does not allow annualized adjustments for temporary or seasonal workers. It also doesn’t allow part-time employees to be adjusted to full-time equivalents.
Even before the Dodd-Frank requirement, the R.I. General Assembly began trying to use incentives and tax policy to help close the gap between CEO pay and that of the average employee. Since 2014, Rhode Island senators – most recently Sen. Jeanine Calkin, D-Warwick – have introduced a bill four times that would give preferential treatment in awarding state contracts to companies with CEO pay ratios of 25 to 1 or less.
Calkin’s bill is awaiting a hearing in the Senate.
