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Income Inequality: Best & Worst Companies

July 26, 2012
Investing, Investments
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Are CEOs overpaid?  A CEO typically spends his entire career working his way up the corporate ladder before being handsomely rewarded with a multi-million dollar paycheck.  Some would say he’s earned it.  But workers at these corporations work really hard too and are often lucky to ever take home a six figure salary.  What is a fair ratio of CEO to average worker pay?

NerdWallet examined the compensation of the highest paid employee of 500 large U.S.companies and compared it to the compensation of an average worker at that company.  While every CEO makes many times the earnings of their average worker, the inequality is far more dramatic at some companies than others.  On average, the ratio of highest to average compensation at the 500 companies of the S&P500 was 414, meaning that the CEO takes home $414 for every $1 that an average employee earns.  Below are a few of the best and worst American companies in terms of income inequality.

Worst: Highest Inequality

1.  Abercrombie & Fitch

Top executive pay: $48.0 million (Michael Jeffries)

Average employee pay: $4,857 (many part-time retail employees)

Highest-to-average ratio: 9,897

Other retailers with ratios over 1000: JCPenney


2.  Yum! Brands

(Pizza Hut, Taco Bell, Long John Silvers)

Top executive pay: $20.4 million (David Novak)

Average employee pay: $2,944 (many part-time fast-food employees)

Highest-to-average ratio: 4,313

Other fast-food chains with ratios over 1000: Chipotle, Starbucks, Darden (Red Lobster), McDonald’s



3.  Apple

Top executive pay: $378.0 million (Timothy Cook)

Average employee pay: $166,026

Highest-to-average ratio: 2,277

Other technology companies with ratios over 1000: Oracle, Computer Sciences




Best:  Lowest Inequality


1. Zions Bancorp

Top executive pay: $2.2 million (Harris Simmons)

Average employee pay: $82,434

Highest-to-average ratio: 27



2. Berkshire Hathaway

Top executive pay: $974,750 (Marc Hamburg)

Average employee pay: $31,993

Highest-to-average ratio: 30





Top executive pay: $1.7 million (Jeff Bezos)

Average employee pay: $40,712

Highest-to-average ratio: 41



4. Southwest Airlines

Top executive pay: $6.6 million (William Way)

Average employee pay: $69,104

Highest-to-average ratio: 95