The Highest Paid CEOs in Rhode Island
Tuesday, April 14, 2015
The average Chief Executive Officer made 208 times the average worker's salary in Rhode Island in 2013, according to a study, “Executive Paywatch: High Paid CEOs and the Low Wage Economy,” published by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
According to the Bureau of Labor Statistics’ data for production and nonsupervisory workers, the average worker in Rhode Island made $43,489 a year in 2013, while the average CEO in Rhode island, according to the AFL-CIO was paid $9,024,351.
Nationally, the CEO to worker pay ratio in 2013 was 331 to 1, and the CEO to minimum wage worker ratio was 771 to 1.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“Runaway CEO pay is fueling economic inequality, a dangerous trend that undermines the goal of raising wages for all,” Anthony DeAngelo, press secretary for the AFL-CIO, told GoLocalProv in a statement. “CEO pay has increased dramatically at the same time that worker pay has stagnated due to policy choices that favor the 1 percent over working people.”
Mike Stenhouse, head of the Rhode Island based think tank Center for Freedom and Prosperity disagrees. "In a depressed economy, such as in RI, wage disparities tend to increase,” Stenhouse told GoLocalProv. “With lower numbers of middle-class jobs, the average income for all Rhode Islanders will go down, increasing the disparity. The compensation of CEOs or anyone else in the free-market should be of absolutely no concern to taxpayers."
SEE THE LIST OF THE HIGHEST PAID CEOs IN RHODE ISLAND IN THE SLIDESHOW BELOW.
Rhode Island has two CEOs on the AFL-CIO’s Top 100 CEO Pay list - CVS Health’s Larry Merlo was the 29th highest paid CEO in the country, and Hasbro’s Brian Goldner was the 38th highest paid.
Merlo received a total compensation of $31,330,162 in 2013, which includes a base salary of $1,337,500, stock awards worth $6,750,048, option awards worth $4,000,002, “Non-Equity Incentive Plan Compensation” worth $8,501,412, Change in Pension Value and Deferred Compensation Earnings of $8,467,509, and other benefits worth $2,273,691. At that rate, Merlo earns 889 times the average American worker’s pay, calculated by the Bureau of Labor Statistics at $35,239.
Hasbro’s Brian Goldner received a total compensation of $27,440,726 in 2013, which includes a base salary of $1,248,077, stock awards worth $21,562,343, option awards worth $2,421,045, “Non-Equity Incentive Plan Compensation” worth $1,800,000, Change in Pension Value and Deferred Compensation Earnings of $61,934, and other benefits worth $347,327. At that rate, Merlo earns 779 times the average American worker’s pay, calculated by the Bureau of Labor Statistics at $35,239.
The CEO of Textron, Scott C. Donnelly, is the next highest paid CEO in Rhode Island, with earnings of $9,918,672 or 281 times the average American worker’s pay, followed by United National Food’s CEO Steven L. Spinner, who earned $4,849,221, which is 138 times the average pay.
In 2013, CEOs of the Standard & Poor’s (S&P) 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO.
“Today’s ratio of CEO-to-worker pay is simply unconscionable,” states the AFL-CIO report. “While CEO pay remains in the stratosphere, production and nonsupervisory workers took home only $35,239 on average in 2013, and a full-time worker making the federal minimum wage earned only $15,080.”
"The question of CEO compensation is nothing more than a manufactured class-envy controversy by those who want to dismantle the free-enterprise system,” counters Stenhouse. “Any state regulations in this area would be misguided, and would further make our state less likely to maintain and attract the big corporations that we so desperately need to headquarter here."
It is important to note that the AFL-CIO’s CEO-to-worker comparison isn’t exact. The AFL-CIO’s CEO compensation includes stock and option awards, and other income sources, while the measure for workers just includes pay, and does not include pension or 401(k) plan contributions from the employer. According to the Wall Street Journal, AFL-CIO officials said there is an absence of data showing what individual employers pay their employees, so information from the Bureau of Labor Statistics is used that is based on workers’ salaries.
Minimum Wage
According to the AFL-CIO report, 49.6% of workers making at or below the minimum wage are age 25 or older. The federal minimum wage is $7.25 an hour, while the Rhode Island minimum wage is $9.00 an hour.
The AFL-CIO supports raising the federal minimum wage to $10.10 an hour.
“Raising the minimum wage is a critical and simple way to help repair the underlying weakness in our economy. It would boost consumer spending and increase the purchasing power of millions of low-wage workers, especially in states with the highest percentages of low-wage workers—many of which also have the highest rates of poverty,” stated DeAngelo.
Stenhouse disagrees that the best way to kickstart the economy is by raising the minimum wage. "Increasing the cost of doing business by increasing the minimum wage in Rhode Island only serves to worsen our already poor business climate, makes us less competitive with other states, and may force employers to lay off workers or reduce part-time hours."
"The irony, is that in RI, the vast majority of minimum wage workers are not the poor, heads of household that proponents of raising the wage often conjure up ... in fact most minimum wage workers are young, living with another family member, and middle class. So that most of the minimum wage increases will go to single, middle class workers ... potentially paid for on the backs of workers laid off who may indeed be trying to support their low-income families."
According to an April 2015 report by the Rhode Island Center for Freedom and Prosperity, raising the minimum wage in Rhode Island would cause the state to lose up to 3,466 jobs.
The Center for Freedom report states that only 28% of those earning minimum wage work close to a full-time, 40-hour week. About 55% live with another family member or friend and are not fully responsible for all living expenses. The average family income is over $61,000 for those who currently earn $8.25 per hour or less, and about 60% are below the age of 25.
Related Slideshow: The Top Paid CEOs in Rhode Island
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