Here is The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.
CEO pay keeps climbing. And that means more money in the city of Portland’s coffers.
A little bit more, at any rate.
Portland levies an unusual tax on companies that pay their chief executives more than 100 times what they pay their median workers.
That tax brought in $4.9 million in 2019, the most recent year for which the city has final data, up 40% from the first year Portland levied the tax, in 2017.
While that’s a tiny drop in a city budget with $609.3 million in discretionary funds, it’s roughly equal to what the city spends on:
- 52 entry-level police officers.
- Operations for three fire stations, staffed by 39 firefighters.
- The combined budget of the city’s Office of Equity and Human Rights, the city’s budget office and the Bureau of Emergency Management.
Portland’s rising tax revenue from the CEO pay tax is emblematic of the steady rise in a rapid rise in executive compensation that not only continued but accelerated during the pandemic.
A survey by The Associated Press found the median pay for CEOs listed in the S&P 500 hit $12.7 million last year, up 5% from in 2019. The pandemic didn’t deflate corporate profits, and it didn’t make a dent in CEO pay, which rose faster in 2020 than it did the prior year.
Portland approved its CEO tax in 2016, levying a surcharge on top of the city’s regular business tax. Publicly traded companies whose CEOs make more than 100 times their median workers’ income pay a 10% surcharge; those who pay their CEOs 250 times what the median worker earns pay a 25% surcharge.
The city won’t disclose which companies pay the tax or how much each pays. But federal regulators require most publicly traded companies to disclose what they pay their CEOs each year and what they pay their median worker.
So each year, The Oregonian/OregonLive tallies worker and CEO pay for some of the largest companies active in Oregon and Southwest Washington.
The list (at the bottom of this article) reveals some eye-popping pay disparities.
Nike valued CEO John Donahoe’s compensation at nearly $33 million in 2020, 913 times what the company paid its median employee. Donahoe’s compensation actually fell last year, though, because he received a $45 million signing bonus when he became CEO in 2019.
Rodney McMullen is CEO of Kroger, the Ohio company that owns the Fred Meyer grocery chain. His pay totaled $22 million last year, 909 times the $24,617 Kroger paid its median worker. And while McMullen got a 6% raise last year, the median worker’s pay actually fell by 6%.
The tally doesn’t capture the entirety of CEOs’ wealth.
In Vancouver, for example, ZoomInfo CEO and co-founder Henry Schuck owns stock worth about $4.6 billion before he and other investors sold off a portion of their stake. Like Amazon’s Jeff Bezos and other founding CEOs, Schuck derives his fortune from his large ownership stake rather than the salary he draws for running the business.
And some companies, ZoomInfo among them, are exempt from the rules governing worker pay disclosure for a variety of reasons.
Proposals for a national wealth tax or other measures to rein in CEO pay have gone nowhere. San Francisco will have its own tax on CEO pay beginning next year, following Portland’s lead, but there is no evidence such measures will constrain what companies will fork over to their top executives.
There are signs, though, that some of the forces pushing up CEO pay are finding their way to their employees, too.
In Oregon, workers are earning 10% more than they did before the pandemic, according to the Oregon Office of Economic Analysis. Wages are rising especially fast in some low-paid sectors.
Oregon hospitality workers’ average wage is up to $19.49 an hour. For a full-time worker, that’s a $3,800 annual raise in just 12 months.
It’s not at all clear workers’ wages will keep rising, and even an extra $3,800 each year does little to make up the yawning gap with CEOs. But it does suggest that the pandemic’s economic upheaval has forced businesses to place more value on their workers’ contributions.
Here’s the full list. (Can’t see it? Click here.)