An economy that works is an economy that values every worker, from the retail worker to the driver that delivers your packages. Every person has an integral part in sustaining our economic ecosystem and each person is an important part of our shared community. Our current system is one in which wealth is highly concentrated. One example of deepening inequality is the gap between top company executives pay and that of the company’s typical worker. For decades, CEOs have seen exponential raises while ordinary workers struggle to keep up with inflation.

The CEO pay ratio is a useful measure to indicate how outsized their compensation is in comparison to the median worker at their company. In 2023, the pay ratio for the biggest Ohio employers rose after a relatively steep decline between 2021 and 2022 from 273-to-1 to 308-to-1.[1] This trend aligns with the growing income inequality Ohioans are experiencing. CEOs saw a 19.95% increase in compensation— their workers saw a 0.45% decrease.[2]

While CEOs enjoy the fruits of their employees’ labor, many workers can hardly afford groceries for their families. The median worker pay in 2023 across the top 50 largest corporate employers in Ohio was $54,857—a nominal increase of $1,536 from 2022. Accounting for inflation, pay decreased by $251,[3] the approximate cost for a month of electricity and gas in Columbus, Ohio.[4] Ohioans deserve an economy that works for them: one where the value they produce for a company is reflected in their paychecks, instead of CEOs’ wallets.

Since 2017, all publicly traded American companies are required[5] to include in their regular reports to the Securities and Exchange Commission (SEC) the ratio of CEO pay to median worker pay. Fifty of Ohio’s 100 largest employers[6] filed such reports—known as proxy statements—last year. The other 50 include nonprofits (like the Cleveland Clinic), government agencies (Wright-Patterson Air Force Base), and privately owned (Giant Eagle) or foreign companies (Honda), none of which are required to report their CEO pay ratio.

The SEC filings used were for fiscal year 2023,[7] with many of the annual shareholder meetings being held March through May of 2024. For many companies, SEC filing requirements dictate they must submit their Schedule 14A proxy statements 120 days after their fiscal year end.[8] Therefore, those with annual shareholder meetings in that March to May period, had fiscal years ending December 2023 through February 2024. The Appendix notes which companies reported filings not during the March to May period.

Three of the public companies listed in Ohio’s top 50 list do not have data available for fiscal year 2023. Rite Aid filed for bankruptcy in October of 2023[9] and has not filed a proxy statement in the past year. Worthington Industries split into Worthington Enterprises and Worthington Steel, divvying up its Ohio employees across two companies.[10] Cedar Point’s holding company, Cedar Fair, merged with Six Flags and does not have pay ratio data for the merged company from fiscal year 2023.[11]

A company’s CEO Pay Ratio compares the compensation of its CEO and its median employee. The median employee is the one at the middle of the pay scale: paid more than half of company’s workers, and less than the other half. However, companies have considerable leeway in calculating the ratio. They may include non-wage compensation like bonuses and benefits, leave out up to 5% of their workforce, and use the same median employee for three years, even if that employee’s compensation changes and they no longer represent the median.[12] These factors make it difficult or impossible to meaningfully compare CEO pay ratios among companies, which is why we do not rank them. Despite these inconsistencies, the data clearly shows the vast disparity in pay between CEOs and typical workers.

In last year’s report, we found that the median CEO pay ratio fell 30% from 396-to-1 down to 273-to-1, in part due to union wins and their ripple effects and a dip in stock prices that temporarily reduced median CEO pay.[13] The ratio is back up this year, with the CEOs of Ohio’s top employers being paid 308 times that of the median employee. General Motors’ pay ratio is closest to the median at 303-to-1. With 4,483 Ohio employees, it is the 72nd largest employer in the state. GM reported that its CEO, Mary Barra, was paid $27,847,405 last year, and its median employee was paid $91,778. GM excluded 7,595 employees in other countries and included additional compensation — like stock options and bonuses — in its median employee calculation.[14] Those factors make the median employee pay appear higher than it would otherwise, but they are allowable under the rules of Dodd-Frank.

CEO pay calculations may not include compensation in the form of time-vested stock, allowing a company to report a much lower ratio than if the value of the stock were included. For example, Amazon reported a relatively low pay ratio of 37-to-1, with CEO Andrew Jassy making $1.3 million and the median worker $36,274.[15] However, Jassy adopted a trading plan in November of 2023 granting him the ability to sell up to 190,900 shares of Amazon stock by December of 2024.[16] With Amazon stock currently[17] valued at $209.79 per share, Mr. Jassy’s trading plan is worth more than $40 million. That is over 1,000 times more than Amazon’s reported median worker was paid last year. Jeffrey Bezos, founder and Executive Chair of Amazon, has 50 million shares — currently worth more than $10.4 billion — being sold before January 31, 2025.[18] Compared to Amazon’s reported median pay in 2023, that is a ratio of 286,707-to-1.

Bath and Body Works shows how difficult measuring median employee compensation can be using existing reports. In both 2022 and 2023, the median worker was a part-time, hourly employee working around 11 hours per week. Bath and Body Works reported median compensation of $10,669 in 2022[19] and $9,834 in 2023.[20] They also extrapolate those amounts for a full-time employee, estimating $37,100 for 2022 and $34,500 for 2023. Using the calculated full-time employee compensation, the CEO pay ratio in 2023 was 339-to-1; using the true median employee the CEO pay ratio skyrockets to 1,189-to-1. This ratio is an increase from the 2022 true CEO pay ratio of 934-to-1, in part due to a 17.3% raise for Bath and Body Works’ CEO, Gina R. Boswell, and a 7.8% decrease in the median worker pay.[21]

It wasn’t always like this: In 1978 the national CEO pay ratio was 31-to-1.[22] The Reagan administration’s Economic Recovery Act of 1981 contributed to deepening inequality, granting large tax cuts to higher income individuals.[23] The Roosevelt Institute reported that by 1988, millionaires received on average $226,000 in annual tax cuts, while workers making $40,000 only saw $603.[24]

Reagan-era tax cuts were only the beginning of the increasing disparity between corporate elites and working people. In the ‘90s, corporations started moving toward stock options to incentivize CEO performance, with the logic that a CEO’s compensation would be determined by the value of the company stock. In theory, a good CEO will increase the value of stock, and their pay will increase commensurately.[25] In reality, changes in stock prices are dictated by a variety of factors that are entirely outside a CEO’s control, from oil prices to global pandemics.[26] In fact, studies have found little to no recognizable link between stock prices and CEO performance.[27]

As the Institute for Policy Studies documents in its 30-year series of “Executive Excess” reports, traditional stock incentives rewarded CEOs who took short-term risks that jeopardized the long-term stability of their corporations, and the futures of their employees.[28] As corporate boards and shareholders have recognized this pattern, they have begun using time-vested stock awards—awards that the recipient can only have access to after a specified period—to encourage long-term planning. While this is a promising shift to discourage high-risk moves, it does not fix the disparity between CEOs and workers.[29] Corporate boards and CEOs are still able to set CEO compensation with little to no oversight: The ability to repurchase company stocks[30] and grant more shares to CEOs is not restricted by law. This lack of substantial oversight encourages boards and CEOs to continue raising their pay instead of investing in workers, research and development, and more.[31]

Organizations that report on CEO pay use different methods to calculate and understand trends. For example, the Economic Policy Institute (EPI)[32] and AFL-CIO[33] report that the national ratio declined last year, while Equilar[34] reports an increase. In all three cases, the pay disparity is extreme. EPI reported the 2023 CEO pay ratio to be 290-to-1, AFL-CIO 268-to-1, and Equilar 196-to-1. Regardless of how corporations compensate their CEOs or how the pay ratio is measured, the bottom line is clear: broadly, CEOs do not earn what they are paid. With compensation based on an at-times arbitrary market, CEO performance is low on the list of what brings value to a company.

Among the 50 top publicly traded employers in Ohio, the average CEO pay for 2023 was over $17.4 million,[35] a 19.95% increase from the previous year in real dollars.[36] Those same employers allowed median worker pay to fall behind inflation, from $55,108[37] in 2022 to $54,857 in 2023, a decrease of 0.45%. Since 2017, the median annual pay reported by Ohio’s largest corporate employers has fallen by more than $10,000 when adjusted for inflation.[38] In that same period, the statewide median pay for workers across all sectors and employer types (including those at large corporate employers) has increased by $5,304.[39]

Figure 1 shows how these trends have reduced the gap between the statewide median[40] and the median pay at Ohio’s top corporate employers.

Figure 1

After the steep decline in wages during the COVID-19 pandemic, corporate median worker wages recovered a fraction of what was lost. Statewide median worker pay, on the other hand, fully recovered COVID-19 loses and then some. As corporate median worker pay is accounted for in statewide data, the recent rise in statewide worker pay indicates strong enough gains elsewhere in the labor force to offset corporate median worker loses. Meanwhile, corporate CEO pay ratios increased last year—money that could have been allocated to those creating company success.

The highest-paid CEO among big corporate employers in Ohio was Christoper Winfrey of Charter Communications, which owns Spectrum. In 2023, Winfrey was paid a whopping $89,077,078—1,635 times what Charter paid its median employee. Charter’s proxy statement reports that around 75% of that compensation is in equity awards intended to provide value over a multi-year period; however, even their alternative calculation of Winfrey’s pay for the year of 2023 still landed him in the highest paid position at $35,753,917.[41]

The median pay among CEOs was $14.9 million, sandwiched between Goodyear Tire CEO Mark Stewart ($14,740,302)[42] and Abercrombie & Fitch CEO Fran Horowitz ($15,035,354).[43] Horowitz was paid 6,076 times more than A&F’s median employee, due mostly to Abercrombie’s high concentration of part-time, seasonal, and temporary workers—a majority of whom they report are students seeking flexible, entry-level employment. Abercrombie’s median worker is a part-time associate working on average 32 hours a month for eight months and making $2,475 during that period. That equates to $9.67 per hour, below the current Ohio minimum wage for adults.[44] Whether in high school or post-secondary education, students deserve to earn the value they produce for a company.

All but three of the big-50 CEOs were paid more than $5 million last year. Forty of them were paid more than $10 million, and 15 were paid more than $20 million. Only one CEO was paid less than $1 million: Warren Buffett of Berkshire Hathaway ($413,595), who has been among the lowest paid since the beginning of the SEC filing requirements for CEO Pay in 2017.[45] Buffett’s relatively low pay and Berkshire Hathaway’s inclusion of all taxable income in their determination of median worker pay makes Berkshire Hathaway’s ratio 5.39-to-1.[46] This low ratio is not indicative of Buffett’s outsized wealth, however. Buffett is a billionaire who makes most of his income from his shares in the company. His net worth is $146.6 billion, 6.37 times more than the $23 billion Berkshire Hathaway paid in taxes in 2023.[47]

Figure 2

Of the 25 companies with median worker pays less than the set median ($54,857), 21 had CEO pay ratios above the set median (308-to-1). In other words, 84% of the top employers in Ohio with lower-end wages compensated their CEOs at least 308 times more than their median workers. CEO pay ratios are one indicator of the much broader economic trend over the last 45 years: A dramatic increase in income inequality. In Ohio and nationally, income inequality has increased since 2010.[48] Income is distributed more equitably in Ohio than in the nation overall, but 2023 was the first year on record in which Ohio’s income distribution became less equitable while the nation’s became more so.

Figure 3

One reason for income inequality in Ohio is that wages rise faster for some groups than others. Since 1979, the median wage for Ohio workers has increased by 9.4% adjusting for inflation. For the 90thpercentile of wage earners, they experienced a 33.8% increase in wages. Over the past 45 years, the percent difference between the 50thpercentile wage earners and 90thpercentile wage earners grew from 79.3% to 119.2%, when converted to 2023 dollars.[49] Figure 4 shows just how much income inequality has expanded since the onset of the Reagan administration—the genesis of sweeping tax cuts for the highest paid Americans and rollbacks on corporate regulation.[50]

Figure 4

The 90th percentile wage is only the tip of the income inequality iceberg: the top 0.1% is where the majority of the nation’s income is concentrated. Economic Policy Institute reports the average annual wage for the 90thto 99.9thpercentile wage earners to be $560,249.40 in 2022, $579,029.65 in 2023 dollars.[51] The average annual wage for the top 0.1% of wage earners in 2022 was $2,779,030.50 ($2,872,187.02 in 2023 dollars)—far less than the median CEO pay ($14.9 million) in Ohio among the largest corporate employers in 2023.

Many of Ohio’s large corporate employers set median pay so low that employees qualify for help affording food, childcare, or health insurance. Nine of the top corporate employers in the state pay their median employee less than $15 per hour, just under 175% of the federal poverty level (FPL). Dollar General’s median employee in 2023 was a full-time store associate paid $18,657 in annual compensation, approximately 125% FPL for one person.[52] To qualify for SNAP, a household’s gross monthly income must be below 130% FPL.

Let’s paint a picture: Ohio households average two children per family.[53] If each of the median workers at the top 50 corporate employers in Ohio were a single parent with two children with no other source of income: Nearly 20% qualify for SNAP,[54] 46% qualify for Medicaid,[55] and 44% qualify for a publicly funded childcare option.[56] State programs help under-paid employees meet the cost of living — a crucial function of any government. However, businesses that depend on public services to keep their workforce stable and healthy are taking advantage of systems designed to support individuals, families, and communities.

Figure 5

For decades, corporations have not been restrained enough in their compensation policies. Policymakers voting in the interest of corporate lobbyists instead of their constituents has contributed to the CEO pay ratio being so large. Correcting the widening pay disparity requires intentional changes to corporate governance, tax law, union protections, and worker wages. Policymakers have a variety of options.

Prohibit share buybacks

Stock repurchasing is a method of reducing the number of shares in the open market, therefore increasing the value and price of those shares that remain. There are multiple reasons a corporation may choose to repurchase shares—mainly, it increases the value of each remaining share outstanding in the market, communicating to shareholders that the company is confident about its future earning potential.[57] However, this tactic comes with an added bonus for executives: increased stock value means that CEOs with stock award compensation plans see more payout. After the crash of the stock market in 1929 and subsequent Great Depression, the U.S. Senate Banking Committee sought to discover the cause of the crash. Hearings uncovered among other things preferential stock deals given to politicians and public figures, especially from J.P. Morgan, Jr. himself.[58] The Securities and Exchange Act of 1934 made share buybacks illegal.[59] They remained illegal until 1982, when this protection was rolled back.

Walmart, the top corporate employer in Ohio,[60] has a CEO Pay ratio of 976-to-1. The Board of Directors authorized a repurchase of over 29 million shares for a total of $2.4 billion between November of 2023 and January of 2024. In January 2024, Walmart repurchased its final portion of those 29 million, buying back 10 million shares.[61] Subsequently on January 31, 2024, CEO Doug McMillion was able to sell 128,360 shares of fully vested stock per his trading plan.[62] Walmart’s Form 10-Ks state that they repurchase shares from “time to time,” but on each of their SEC filings for the past 4 years they have repurchased shares during the same period their executives have shares vested and ready to pay out.[63] We cannot know how that repurchasing impacted Mr. McMillon’s stock awards with data available currently, however, research has found that buybacks, on average, are responsible for more than $350,000 in annual bonuses for S&P 500 CEOs, of which Walmart is one.[64]

The Inflation Reduction Act of 2022 imposed a new excise tax on buybacks, requiring one percent of the fair market value of stocks repurchased.[65] This Act is a step in the right direction to disincentivizing outsized CEO pay and, while the federal government should prohibit stock buybacks all together, Congress ought to resist repealing the Act—a proposed reform in Project 2025.[66]

Impose tax penalties on companies with outsized CEO pay

Congress members have introduced the Tax Excessive CEO Pay Act each Congress since 2021. This Act would disincentivize outsized CEO pay by instituting a federal tax on companies with CEO pay ratios above 50-to-1. Above 50-to-1 constitutes a 0.5% increase to the current 21% tax rate, above 100-to-1 a 1% increase, above 200-to-1 a 2% increase, and so on until capped at 26% for ratios greater than 500-to-1.[67] If enacted in 2020, Amazon would have owed an additional $1 billion in taxes over a one-year period, enough to finance 115,089 public housing units for a year, according to an analysis from the Institute for Policy Studies.[68]

A newer House resolution introduced in the 118thCongress and referred to the Ways and Means committee would place a smaller tax on corporations with pay ratios greater than 50-to-1 by imposing an additional 1% tax on top of the current 21%, and only applies to employers with more than $100 million in annual gross receipts and $10 million in payroll over a 3-year period.[69] Congress should pass one of these bills.

Tax penalties do not only have to be limited to federal action — Portland, Oregon’s city council and a San Francisco, California ballot initiative have passed CEO pay ratio tax penalties. The Institute for Policy Studies estimated that the Portland tax would generate $2.5 to $3.5 million per year for the city.[70] In 2021, they generated $5.5 million.[71] In San Francisco, the estimate was $140 million.[72] In the 2022-23 fiscal year, the San Francisco overpaid executive tax generated $206 million.[73] Ohioans and Ohio policy makers should consider similar legislation.

Institute stronger union protections and remove barriers to organizing

Unions allow workers to advocate for themselves with legal protection. Unions are important for safety standards, pay, benefits, and more. Union density can offset some of the outsized policy setting power of corporations and the wealthy few.

In 2023, 32 new unions were formed, covering 1,073 workers in Ohio.[74] Since January 1, 2021, union organizing skyrocketed 433%, growing from just 6 new unions a year to 32. As of the writing of this paper, 42 new unions have been formed in 2024 alone. This upward trend in union success is promising for worker’s rights across Ohio, however union formations in 2023 only protected 0.02% of Ohio’s labor force. Policymakers can and should make the organizing process simpler and protections stronger.

Congress should pass the Protecting the Right to Organize (PRO) Act, which hinders employers’ ability to intimidate and interfere with union organizing. The Act passed the House in 2021[75] but has since been reintroduced in the 118th Congress with no votes.[76] Ohio state representatives unanimously passed the Pay Stub Act[77] in the House, which would require Ohio employers to provide pay stubs to all employees—joining 43 states that already have pay stub laws.[78] State and local governments can also take measures to support worker’s right to organize by requiring employer neutrality.

Raise pay for working people with a livable minimum wage

A livable minimum wage has been a major point of conversation in Ohio, with a ballot initiative garnering support in 2024, but falling short of the signatures required. While Ohioans voted on and passed an indexed minimum wage back in 2006, it remains far short of what the federal minimum provided more than half a century ago[79] and is still about half of what is needed to make ends meet.[80] With $42,273 needed for a single person to cover costs-of-living in the Columbus, a livable hourly wage would be at least $20 per hour.[81] A $15 minimum wage would raise wages for 470,000 Ohioans and there is broad support for such change.[82] House Bill 96 and Senate Bill 256 in Ohio would increase the minimum wage to $15 per hour by January 2028, to be adjusted for inflation annually. Currently HB 96 is sitting in the House Commerce and Labor Committee and SB 256 in the Ways and Means Committee.[83] Ohio policymakers ought to pass one of these bills.

Outsized CEO pay and pay ratios are indicative of the ever-rising disparity between executives and workers. When corporations are able to determine CEO pay unfettered, everyday Ohioans experience the repercussions. Efforts to reduce the widening gap are overwhelmingly supported[84] and would have widespread meaningful impact on our communities. Policymakers must take measures to control excessive CEO pay, while supporting Ohioans through better wages, union protections, and increased tax revenue from corporations.

Appendix

Tags