The Institute for Policy Studies (IPS) has claimed that it found dozens of large US firms bending rules to pump up salaries of their CEOs.
As many as 51 firms out of 100 with the lowest median worker wages on the S&P 500 Index, were found to have increased salaries of the chief executives last year amid the widening economic destruction brought about by the COVID-19 pandemic.
At the same time, they lowered the wages for their average workers. Such a practice is dangerous and can widen economic inequality, IPS has warned.
On their way to boost executive paycheck, they lowered the performance bar, awarded a special “retention” bonus, and replaced performance-based pay with time-based awards.
As a result, CEO compensation grew an average of US$15.3 million, up 29% from 2019. The rigging seemed to have dealt a heavy blow to around 16 of these firms, forcing them to report a loss.
“This group of profit-losing, rule-bending corporations had the highest average CEO pay at US$17.5 million,” the report noted.
“The 100 S&P 500 corporations we analyzed all paid median compensation under $50,000 in 2020. Some did offer frontline employees paid leave and small pay increases during the pandemic, usually around $2 per hour, but in nearly all cases this modest extra COVID-19 support was only temporary. The real largesse flowed only to C-suites.”