Hartford Business Journal

12 Hartford Business Journal • May 13, 2019 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com W alt Disney Co. CEO Robert Iger's $65.6 million in com- pensation last year recently drew the public spotlight, but not just over how much he made. Abigail Disney, the grandniece of the late company co-founder Walt Disney, criticized how Iger's pay com- pared to the ESPN parent company's rank-and-file workforce. Iger earned 1,424 times more than Disney's median pay of $46,127, the company disclosed as part of a rela- tively new federal rule that requires publicly traded businesses to compare CEO and median-worker pay. That made Iger one of at least a dozen U.S. CEOs with pay ratios of 1,000 or more, according to CNBC. Abigail Disney called that "insane," drawing national media attention and rekindling a focus on how much top executives at publicly traded compa- nies get paid. "What on earth would be wrong with shifting some of the profits — the fruits of these employees' labor — to some folks other than those at the top?" Disney, who isn't involved in the management of the company, tweeted on April 21. No CEOs of Connecticut-headquar- tered public companies had a pay ratio anywhere near Iger's last year, accord- ing to a review of U.S. Securities & Exchange Commission (SEC) filings by the Hartford Business Journal, but area academics say the pay-ratio disclosures, which are in their second year after be- ing mandated by the 2010 federal Dodd- Frank financial reforms, offer an- other window into wealth inequality as debates over how to curb the growing gap be- tween haves and have-nots play out at the state and federal levels. In Connecticut, which is the rich- est state in the nation with the second- highest income disparity between the top 1 percent of earners and the rest, according to the Economic Policy Insti- tute, Democratic lawmakers in recent weeks have proposed higher taxes on capital gains, with some also calling for a surcharge on dividends and interest income in the top tax brackets. Meanwhile, Democratic presidential candidates Bernie Sanders and Eliza- beth Warren have struck a populist tone on income inequality, pledging higher federal taxes on the wealthy. With only two years worth of disclosures thus far, the public may not be fully aware of CEO pay ratios, but executive compensation has long been public record, and regular people know that the incomes of wealthy citi- zens are rising much faster than their own, said Fred McKinney, a business professor at Quinnipiac University. "There's a feeling that there's some- thing awry in our system of divvying up the benefits of the economy," McK- inney said. "I think that it's fueling populist sentiment." Connecticut ratios Last year, Bloomfield-based Cigna CEO and President David Cordani's $18.9 million compensation package clocked in at 298 times the median pay of a Cigna employee, who makes $63,526. That was the highest compen- sation gap among all Connecticut- headquartered companies that filed pay-ratio disclosures by press time. Cigna said it determines employees' compensation relative to the market value of their respective roles. Cordani's ratio "is considered well within the competi- tive market range for our industry," a spokesperson said. One standout is Rhode Island-based CVS Health, which acquired Hartford health insurer Aetna last year for $69 billion. CVS President and CEO Larry Merlo's 2018 compensation totaled just under $22 million, which is 618 times the median CVS pay of $35,529. CVS spokesman Mike DeAngelis said the company has many part-time, tem- porary and seasonal workers, and that Merlo's compensation was driven higher last year by long-term incentive awards. Absent those awards, the CVS pay ratio would have been 518 to 1, he said. Among Greater Hartford headquar- tered companies, Cigna's pay ratio was trailed by Stanley Black & Decker President and CEO James Loree, whose $13.6 million in compensation was 284 times larger than the New Britain-based manufacturer's median worker. Next up was United Technolo- gies Corp. Chairman and CEO Gregory Hayes who outearned the median UTC employee by a 257-to-1 ratio. UTC declined comment, but pointed to its SEC filing, which noted that the majority of workers included in its median-compen- sation calculation were based in other countries. "We believe pay- ing competitive wages targeted at the median of lo- cal labor markets within our diverse industry seg- ments is essential to ensuring a productive, engaged workforce and a sustainable business," the filing reads. "Consequently, a global ratio may not be particularly informative without any context for foreign labor markets and the diversity in the roles of UTC's em- ployees around the world." 'Relatable and shocking' UTC isn't alone in questioning the usefulness of pay ratios. While Congress didn't provide much guidance as to why it mandated the disclosures, UConn business professor Greg Reilly chalked it up to "an attempt to make [executive pay] more relatable and shocking." He said pay ratios are often misin- Wealth Gap Pay-ratio disclosures put executive compensation, income inequality in spotlight Publicly traded companies are now required to disclose pay ratios that compare what their CEOs make in relation to work-and-file employees. Pay ratios for the executives shown above (Top photo, clockwise: CVS' Larry Merlo, Cigna's David Cordani, Stanley Black & Decker's James Loree and UTC's Gregory Hayes) were recently made public. IMAGES | CNBC SCREENSHOTS Fred McKinney, Business Professor, Quinnipiac University Greg Reilly, Business Professor, UConn David Cadden, Business Professor, Quinnipiac University

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