Maybe you’ve been in this position: You’re at work, and a co-worker gripes about a supervisor. Then the conversation takes an ugly turn: “I can’t believe they get paid $[fill in the blank] to boss us around…” It’s a risky bit of gossip, but it happens. Workplaces can be trying, and when it feels like stress isn’t distributed or rewarded equally, anxiety mutates into resentment.
But for most of Maui, it’s not the middle management supervisors who are robbing workers’ coffers – it’s the executives higher up the food chain.
CEO Pay Ratios On the Island
To get a sense of what I mean, take a look around the neighborhood. At your nearest McDonalds, the median annual income of a worker is $7,017. Yet, McDonald’s CEO Steve Easterbrook was compensated $21,761,052 in 2017. If you divide CEO pay by the median worker income, you get a figure that’s referred to as the “CEO pay ratio.” At McDonald’s Corp., the CEO pay ratio is 3,101-to-one. That means CEO Steve Easterbrook makes 3,101 times what is paid to his median employee.
Uptown Texaco is owned by Chevron Corporation, which compensates its workers a median $137,849 per year. Uncle and Aunty behind the counter aren’t the ones making that much (if they are, teach me how to make teri beef). This number reflects the math involved. Median income is the middle, not an average. So, half the employees are making less than these six-figures (gas station attendants), while half are making more (oil rig technicians). This figure pales in comparison to the $24,781,568 made by the Chevron CEO in 2017, 180 times the salary of his median worker.
Walmart CEO Doug McMillon raked in $22,791,276 compared to the median worker compensation of $19,177, for a ratio of 1,188:1. Target CEO Brian Cornell took a comparatively modest $8,399,210, 408 times his median worker’s income of $20,581. Amazon (Whole Foods) CEO Jeff Bezos was compensated $1,681,840 while employees got a median $28,446, a CEO pay ratio of 59:1. That almost sounds philanthropic in comparison to his fellow executives until you consider his 80 million shares of Amazon stock that net $275 million a day. CVS Health Corp. (Longs and Walgreens) CEO Larry J. Merlo made $12,266,076 in 2017, 320 times his median workers.
Chances are, you’ve shopped at one of these chain stores in the last month, and your money has subsidized the bloated paycheck of a rich CEO (note: in Googling the above executives, all were white males) and their gluttonous extraction of labor from the cashier who actually helped you with what you needed. We can play this game, “Which CEO is the greediest?” because of a rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act that mandates CEO pay ratio disclosure of all publicly traded companies. The act was signed into law by President Obama in 2010 as part of an extensive set of reforms following the Great Recession.
2017 was the first fiscal year that public companies were mandated to report CEO pay ratios to the Securities and Exchange Commission, which posts the documents online. Earlier this year, websites like Bloomberg started compiling the data into searchable, accessible databases. Earlier this month, Honolulu Civil Beat’s Anita Hofschneider put the magnifying glass on Hawai‘i-based public companies.
“The gap between CEO pay and the median salaries of their employees for Hawai‘i’s publicly-traded companies is narrower than nationwide,” she wrote, citing Equilar’s CEO Pay Ratio Tracker, which currently lists the median ratio at 66:1.
CEO Pay Ratios at Hawai‘i-Based Public Companies
To tell if companies based in Hawai‘i show more aloha for their workers than multinational ones, look at the SEC data for Hawai‘i’s notable businesses:
• Alexander and Baldwin, Inc., the largest private landowner on Maui had a CEO pay ratio of 43:1. CEO Christopher Benjamin was paid $2,926,176 while the median worker earned $67,369 in 2017.
• Matson, Inc. paid its CEO Matthew J. Cox $4,477,211 and its median worker $101,968 (including company contributions to health plans) for a CEO pay ratio of 44:1.
• Bank of Hawaii CEO Peter S. Ho made $4,686,501 compared to his median worker who made $57,060: a CEO pay ratio of 82:1.
• Hawaiian Electric Industries, which owns HECO, MECO and American Savings Bank paid CEO Constance Lau 47 times the median employee. She made $5,913,746; the median employee made $126,857.
• Hawaiian Holdings (the parent company of Hawaiian Airlines) CEO Mark Dunkerley made $3,848,649 before retiring in Nov. 2017, 54 times the median employee income of $71,298.
• Hawaiian Telcom paid its CEO Scott Barber $1,364,311 compared to its median employee, who got $78,423. Its CEO pay ratio was 17:1.
• First Hawaiian Bank reported CEO Robert S. Harrison received $5,759,774 in compensation in its 2018 SEC filings, an almost $3 million increase from 2015, but did not include median income of its employees nor a CEO pay ratio calculation.
• Maui Land & Pineapple similarly has not filed its median employee income, but reported paying $1,153,750 in 2017 to CEO Warren Haruki.
So Hofschneider’s right, except regarding Bank of Hawaii. The SEC doesn’t have information on First Hawaiian Bank yet, but even considering its minimum wage of $15 an hour, its pattern of executive raises makes it doubtful that FHB’s CEO pay ratio is any better than BOH’s.
CEO Pay Ratios at Maui’s Top Employers
While the aforementioned companies have roots in Hawai‘i, they don’t necessarily employ the most people – our top employers are hotels and other accommodation-industry businesses. Here’s how a few of Maui’s top employers that are public companies compensate their CEOs in relation to their workers.
• Hilton Worldwide Holdings, which owns Waldorf Astoria and thus the Grand Wailea, paid its CEO Christopher J. Nassetta $18,790,698. The median employee received $33,168, for a CEO pay ratio of 567:1.
• The Marriott International (parent company of the Westin, Sheraton and Ritz-Carlton) paid its CEO Arne M. Sorenson $13,311,617 while the median worker got $33,697 – a CEO pay ratio of 395:1.
• Hyatt Hotels Corporation CEO Mark S. Hoplamazian received $9,872,656 last year to his median employee’s $33,121. He made 298 times his median worker.
Cost of Living in Hawai‘i
This all goes to say that the amount of money made by ultra-wealthy CEOs is so monstrously excessive, it’s sociopathic. Hilton Worldwide Holding’s SEC report downplayed CEO Christopher Nassetta’s grossly unequal pay by reporting, “This ratio would have been 325:1 if not for the one-time grant made to the CEO in 2017. The one-time grant was awarded in recognition of successfully completing the spin-offs and transforming Hilton into a new fee-based, capital-efficient business model.” Giving an $8 million “grant” to an executive (who already makes $11 million a year) for simply doing his job is the kind of vampiric exploitation of labor that makes sense if you consider that this is the same cabal to unleash Paris Hilton on the world.
In a local context, the picture gets dimmer. Earlier this month, Hawai‘i Appleseed Center for Law & Economic Justice claimed that “Hawai‘i has the highest ‘housing wage’ in the country,” referencing a report by the National Low Income Housing Coalition titled Out of Reach 2018. “Housing wage” is an estimate of the hourly wage a full-time worker must earn to pay fair market rent without spending more than 30 percent income on housing costs. The report documented the gap between wages and the cost of renting across the United States and found that it’s worst here in Hawai‘i. On Maui, the report calculated, the annual income needed for a studio apartment is $44,960. According to the Bureau of Labor Statistics, that’s over $4,000 more than the median individual income if you extrapolate from median hourly wage.
So, while wealthy CEOs endorse million-dollar executive raises and multimillion-dollar bonuses for themselves, the median employee of a hotel chain will not have the income needed to afford a zero-bedroom rental in Hawai‘i. “This new national report confirms what we all know,” Gavin Thornton, co-director of the Hawai‘i Appleseed Center for Law and Economic Justice, said: “Hawai‘i is facing the worst affordable housing crisis in the country.”
On Wednesday June 27, after MauiTime goes to press but before we’re on newsstands, hotel workers and their allies will unite in Lahaina for a call to action. UNITE HERE Local 5, a union representing approximately 11,000 workers throughout Hawai‘i in the hospitality, health care and food service industries, is organizing the rally, where workers will sign-wave and demand that “One Job Should Be Enough.” The Marriott currently operates eight Local 5 hotels in Hawai‘i. 20 hotels in Hawai‘i have union contracts that are set to expire this year.
In a UNITE HERE Local 5 statement, Laurie DeCoite, a 30-year employee at Sheraton Maui said, “I’m a single mom of 3 kids and I work two full-time jobs as a phone operator at two hotels. I am fighting for this contract to make these jobs good enough so that I can work one job and spend time with my kids. I also don’t want them to struggle with two jobs like me.”
Somewhere, Marriott CEO Arne M. Sorenson’s ears are burning. But at $13 million a year, approximately 400 times DeCoite’s pay at one of her jobs, he can afford to insulate himself from this reality.
It wasn’t always like this. The Economic Policy Institute notes that CEO pay ratios were about 20:1 in 1965. Over the last three decades, however, CEO compensation grew faster than wages for other workers. That’s where we are now: hurting for housing while the national average compensation for CEOs is at a record high, about 235 times the median wage of workers.
There have been a number of proposals towards income parity that address the riches that tend to be hoarded at the top. Examples include taxes on companies with high CEO pay ratios; progressive tax rates that make the wealthy shell out higher percentages on their wealth than working and middle class people; raising the minimum wage, and allocating funds for social and housing programs.
Engagement, advocacy and solidarity with activist-workers are other routes. Buying local is one way to keep money in our community. Even without legislation, we can choose to defund McDonald’s CEO at every meal. The mandatory disclosure of CEO pay ratios means that we can choose to support companies that value fair wages. We can and should expect more from companies, especially ones that built their wealth stealing Native people’s land, polluting the Earth, exploiting third-world labor and peddling junk food to our keiki.
As for me, I’ll be doing my banking at the credit union and getting my summer mangoes at the farmers market.
MauiTime reached out to all candidates for Hawai‘i State House of Representatives and Senate for comment. We asked what specific legislation they would support; whether they would vote to raise the minimum wage, if the state should tax companies with high CEO pay ratios, and if they would support raising taxes to redistribute wealth. A few responded. View our Walk Story 2018 series on the web and in print to see more candidates’ solutions for income inequality and Hawai‘i’s high cost of living.
Andrew Kayes, candidate for State Rep. District 9 (Kahului, Pu‘unene, Old Sand Hills, Maui Lani)
Specific legislation: None.
Raise minimum wage: No, except for inflation.
Taxes on companies with high CEO pay ratios: No.
Raising taxes: No.
Quote: “I think it is important to strive to provide our state residents with equal opportunity to succeed, for example with a great education system, but I do not support trying to equalize outcomes by redistributing wealth.”
Jen Mather, candidate for
State Rep. District 10 (West Maui, Maalaea, North Kihei)
Specific legislation: Basic necessities exempt from GET. Political will to force floor votes on bills.
Raise minimum wage: Yes, but also ensure supply for goods and housing increases.
Taxes on companies with high CEO pay ratios: Look at corporate income tax instead and aim for tiered systems that protect small businesses while lessening breaks on large companies.
Quote: “We need to ensure that we are doing what we can to also legislate to increase supply, whether that means attainable housing through smart growth, food availability through local, regenerative agriculture, and investments in renewable energy sources, all of which can ease the burden to our wallets and relieve environmental pressures at the same time.”
Lee Myrick, candidate for State Rep. District 11 (Kihei, Wailea, Makena)
Specific legislation: Politicians need to listen to voters.
Raise minimum wage: Yes, $15 immediately; steps to $27 over four years.
Taxes on companies with high CEO pay ratios: Yes.
Raising taxes: Yes.
Quote: “I would redistribute wealth by giving employers the option to share their net profits gains over 50% with their employees in a profit-sharing program, or get a partial tax credit for paying a community tax. This tax will fund the programs that the state never seems to have enough funds for: after-school programs, drug centers, affordable housing, behavioral and developmental disabilities.”
Nikhilananda, candidate for State Rep. District 13 (Haiku, Hana, Kaupo, Kipahulu, Nahiku, Pa‘ia, Kaho‘olawe, Lana‘i, Moloka‘i, Molokini)
Specific legislation: Cap CEO pay. Levy fines extreme differences in CEO and worker pay. Award government contracts to companies with small pay gaps. Luxury tax on executive pay above a certain threshold.
Raise minimum wage: $20 an hour, reached in two dollar increments per year.
Raise taxes: Property taxes levied on a tiered basis.
Quote: “Income inequality is a major political and policy issue, and chief executive pay has become a powerful symbol of the growing divide between rich and poor. This widening gap hurts the economy. When wealth is concentrated instead of broadly distributed, it curtails the spending of middle- and lower-income consumers.”
Roz Baker, candidate (incumbent) for State Sen. District 6 (South and West Maui)
Specific legislation: HB 2748, CD1, relating to housing. SB 2293, relating to affordable housing. SB 2401, relating to homelessness. SB 2990 relating to paid family leave.
Raise minimum wage: $15 and review establishing future increases.
Taxes on companies with high CEO pay ratios: CEO pay is the purview of the company’s board of directors
Raising taxes: A targeted approach to meet crucial needs.
Quote: “Paid Family Leave is an important progressive policy we need to enact. Many of Hawai`i’s workers are not covered by any type of leave program.”