While tens of millions of Americans lost their jobs – and hundreds of thousands of small businesses closed for good – many of America’s top executives abused a “rigged” system to grow their own compensation.
The Institute for Policy Studies looked at 100 businesses that are part of the S&P 500. More than half of those companies – 51 – “bent their own rules to pump up executive paychecks.”
“Common manipulations included lowering performance bars to help executives meet bonus targets, awarding special “retention” bonuses, excluding poor second-quarter results from evaluations, and replacing performance-based pay with time-based awards,” according to the Institute for Policy Studies’ new report.
The think tank asserts that executives at the 51 companies benefited from increased compensation as their workers had paychecks cut: “CEO pay averaged $15.3 million, up 29 percent over 2019, while median worker pay dropped 2 percent, to a $28,187 average. The CEO-worker pay ratio at these 51 firms averaged 830 to 1.”
IPS highlights several corporations that found creative ways to pad their executive compensation, including Tyson Foods, Carnival, Chipotle Mexican Grill, and Dollar Tree. The tricky accounting at Hilton underscores the corporate priorities fueling America’s income inequality. More from the report:
The pandemic has been devastating for the hotel industry, but not so much for Hilton CEO Christopher Nassetta. His 2020 compensation package came to $55.9 million, the highest among the 100 S&P 500 firms with the lowest median wages.
Nassetta —like so many other pandemic-era top executives —failed to meet his performance goals last year. Hilton board members, in response, thoughtfully inflated Nassetta’s paycheck by “restructuring” the company’s restricted stock awards. A zero performance payout to Nassetta, the board rationalized, would have “impaired the awards’ ability to retain key talent and align our management team with the actions needed to drive long-term performance.”
The hotel giant displayed no such concern about retaining frontline workers. Between 2019 and 2020, Hilton slashed its global workforce from 173,000 to 141,000 and median pay from $43,695 to $28,608. Those moves would widen the company’s CEO-worker pay ratio for 2020 up to 1,953 to 1. Hilton doesn’t disclose the demographics of its workforce, but in the hotel industry overall in the United States women make up 88 percent and people of color make up 67.5 percent of maids and housekeeping staff.
Brian Rees, deputy director of corporations and markets at the AFL-CIO, told CBS News about the new report, “CEO pay last year revealed the dirty secret that CEOs are not really paid based on their own individual performance. When you compensate CEOs based on share prices, it incentivizes destructive behavior, but also contributes to economic inequality.”
Twenty-two million American jobs were lost during the pandemic, and only 14 million have been regained. According to a report by the Federal Reserve, the number of small businesses permanently closed during the pandemic was 200,000 higher than average levels.
