CEO Daily: CEO Pay Ratios

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FOLLOW subscribe SHARE April 16, 2019 Good morning. David Meyer here, filling in for Alan from Berlin. Last year was the first in which publicly traded companies in the U.S. were obliged to disclose their CEO pay ratios. The numbers are in and, while quite a few CEOs were shown to be earning hundreds or thousands of times what their companies’ median employees earn—per Equilar, the median CEO pay ratio was 254:1—one chief executive’s ratio stuck out like a sore thumb. Step up, Elon Musk. In 2018, the Tesla chief was paid an astonishing 40,668 times more than the earnings of the median Tesla worker. In theory, at least. The reality is somewhat more complex, as Tesla had to report a comparison of Musk’s $2.28 billion in stock options with that median worker’s $56,163 pay for the year. Musk only gets to claim that cash if the company hits high valuation and operational targets—if Tesla misses all the targets, he gets zilch. Musk’s case is an outlier, but there is a trend of some of the highest ratios being the result of similar factors. For example, as reported by the Financial Times, Oracle co-CEOs Safra Catz and Mark Hurd took home $108 million each in 2018, creating a ratio of 1,205:1. But that includes five years of stock option grants, without which the ratio would have been 282:1. Either way, though, these ratios are high and they’re maybe getting higher—in 2017, when only two-thirds of companies whose filings were surveyed by Equilar reported their CEO pay ratio, the median stood at 235:1. Unions and Democratic presidential candidates will no doubt seize on the disparities as evidence of widening inequality. That’s not hard to do when, for example, Whirlpool CEO Marc Bitzer earns $11.8 million in a year and the median Whirlpool employee gets $20,485. That’s a 578:1 ratio, and remember that the median employee is by definition in the middle of the pack, and not one of the company’s lower-paid workers. Whatever your view of how these figures are calculated and whether their forced disclosure is fair or not, they are politically toxic in this day and age. More news below. David Meyer @superglaze david@dmeyer.eu . Top News Foxconn Chairman Terry Gou, Foxconn's chairman, is to withdraw from the contract manufacturing giant's daily operations as he mulls a run for president of Taiwan. The election is next year. Gou is Taiwan's richest person, and a lot of his wealth is tied up in China—a fact that has some observers worried about the implications of Gou becoming Taiwan's president. Reuters AT&T and Hulu AT&T has sold its Hulu stake back to Hulu for $1.4 billion, meaning Disney now controls two-thirds of the streaming service (the rest is Comcast's.) Hulu is now valued at $15 billion. 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CNBC . content from Deloitte The Tax of Tomorrow In today's digital world, tax leaders are recognizing the value that technologies could deliver to their operating models. In this article, Deloitte looks at the five trends that may disrupt the tax sector and how tax professionals can adapt. Read More . . Around the Water Cooler SpaceX Funding Elon Musk's SpaceX is raising another $500 million in funding, four months after raking in a similar amount. The new cash could help SpaceX speed up development of its Starlink satellite Internet business, which is supposed to support the company's bottom line in the future, but questions are being asked internally about how viable the Starlink constellation would actually be. Wall Street Journal UniCredit Settlement The Italian banking giant UniCredit will pay $1.3 billion to settle a six-year sanction-busting probe in the U.S. UniCredit's German unit has also pleaded guilty to helping sanctioned entities including Iran's IRISL shipping company to access the U.S. financial system. Reuters Brexit Extension If any British lawmakers think there's a possibility of getting yet another Brexit extension after the current one runs out on Halloween, they had better think again. Germany's foreign minister has warned that "you cannot drag out Brexit for a decade," indicating that the country will probably side with France's hardline position should the U.K. seek a further extension. Financial Times PAC Money Many Democratic candidates are swearing off donations from political action committees (PACs,) but what does that mean in practice? As Natasha Bach writes for Fortune, corporate PACs were unlikely to give those candidates much money anyway, and can still donate to the Democratic Party as a whole. Elizabeth Warren, however, has also said she won't attend high-dollar fundraisers and so on in order to provide "equal access"—and that's a meaningful move. Fortune This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here. . EMAIL ALAN MURRAY subscribe share: . This message has been sent to you because you are currently subscribed to The CEO Daily Unsubscribe here Please read our Privacy Policy, or copy and paste this link into your browser: http://www.fortune.com/privacy FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice. For Further Communication, Please Contact: FORTUNE Customer Service 225 Liberty Street New York, NY 10128 Advertising Info | Subscribe to Fortune