Ever wonder how the pay of the top dog where you work compares to the pay of the regular guy or gal working there?
Well, at a number of companies in Lancaster County, you don’t have to wonder any longer. You can look it up.
And at the same time, you can see how your pay compares to the typical employee’s pay too.
Thanks to the federal financial-reform law, the Dodd-Frank Act, most publicly held U.S. companies last year began having to annually disclose the ratio of their CEO’s total compensation to their median employee’s pay.
And in some cases, when comparing what one publication dubbed “CEO vs. Average Joe,” it’s a jaw-dropping difference.
Of a half-dozen publicly held companies based in or near Lancaster County that were checked by LNP, Hershey Co. reported the biggest differential.
CEO Michele Buck got total compensation valued at $11.7 million in 2018, the candymaker reported in its proxy statement. That was 400 times more than the median employee pay of $29,300.
This was no fluke. In 2017, Buck’s annualized pay (to adjust for the fact that she became CEO on March 1, 2017) was 376 times greater than the median employee pay.
Hershey spokesman Jeff Beckman indicated that the scale and nature of Hershey’s business makes the company likely to have a high CEO pay ratio.
“As a large consumer goods company with operations around the world in both established and developing markets, a sizable part of our workforce is in retail and manufacturing positions, with a smaller percentage in management or professional roles,” he said.
Beckman also noted that most of Buck’s total compensation each year is pegged to Hershey’s performance, including its performance in the future.
So while an estimated future payout is reported now -- and is listed as part of her 2018 compensation -- “the actual payout will be determined in the future based on the actual success of the company in future years,” he said.
The other five companies surveyed by LNP had double-digit or single-digit ratios.
Victor Grizzle, CEO of Lancaster-based Armstrong World Industries, earned total compensation valued at $4.7 million last year. That was 59 times larger than the median employee’s pay of $80,600.
At Fulton Financial, CEO E. Philip Wenger earned total compensation valued at $2.8 million in 2018. That sum was 58 times higher the Lancaster-based firm’s median employee compensation of $48,800.
Donegal Group, the Marietta-based insurance holding company, paid CEO Kevin Burke $704,700 in base salary and stock options. That was 11 times more than the median employee pay of $64,300.
The smallest ratio was posted by ENB Financial, owner of Ephrata National Bank. (ENB only reported the ratio for 2017; the threshold for banking companies to report then changed and no longer includes ENB.)
CEO Aaron Groff was paid $351,000 in 2017, seven times more than the median employee pay that year of $48,600.
Why the variance from company to company?
One study of CEO pay ratios reported by 2,005 publicly held companies shows they vary widely by company size and industry.
Executive compensation consultant Pearl Meyer & Partners, in a study released in October, said the average CEO-to-median-employee pay ratio was 144:1 and the median ratio was 69:1.
But a much more accurate indicator was the company’s industry and size.
The ratio was highest at companies that provide consumer discretionary products or services (such as travel, entertainment, clothing and cars), or consumer staples (such as food and soap). The lowest were at utilities and financial companies.
And across all industry sectors, the bigger the company, the more part-time employees and the more foreign employees, the higher the ratio, Pearl Meyer also found. But there was no correlation between a company’s ratio and its financial performance.