Hartford Business Journal

28 HARTFORDBUSINESS.COM | JUNE 28, 2021 The highest ratios topped out at 5,000%, with eight executives earning $100 million or more a year and one (Palantir's Alex Karp) taking home $1.1 billion. CEOs in Connecticut, however, remain relatively modestly paid, with the highest ratio at a company based in Greater Hartford reported by Cigna's David Cordani, who at just under $20 million a year takes home 304 times what the median worker at the company earns — $65,520, a U.S. Securities & Exchange Commission (SEC) filing shows. Cigna calculated its pay ratio based on the median salaries of 68,470 people it employed worldwide as of Dec. 31, 2020, minus workers in the 25 countries with its smallest employee population, or 4.68% of the total, the filing said. "We believe that aligning executive compensation to the achievement of enterprise goals that support our business strategy and drive our innovation will result in the creation of meaningful and sustained long-term value for our shareholders," Cigna said in its 2021 proxy statement. "Performance-based compensation represented approximately 92% of Mr. Cordani's total direct compensation for 2020, including 74% in long-term incentive and 18% in annual incentive awards." Other state companies rewarded their CEOs for revenue gains, like the 19% bump seen by Stanley Black & Decker in the fourth quarter of 2020 in part thanks to demand for its power tools from those undertaking pandemic home projects. Stanley Black & Decker reported $14.5 billion in revenue for all of 2020. "Our executive compensation reflects our company's strong track record and is informed by external benchmarking of the CEO and other leaders," Stanley said in its proxy filing, which detailed how it calculated its 2020 pay ratio of 279. Stanley CEO James Loree took home just over $16 million last year, compared to the $58,362 earned by the median worker at the New Britain-based company, an SEC filing shows. "We are committed to maintaining the best talent in the world across our entire organization, and our pay practices reflect the strength and experience of our global workforce," Stanley said in a statement. Charter Communications CEO Thomas Rutledge was the highest- paid chief executive of a Connecticut- based company. He earned $38.9 million last year, according to the Stamford-based company's 2021 proxy statement, vs. the median employee pay of $56,568. Pay-ratio disclosures were mandated by the 2010 federal Dodd-Frank financial reforms. This represents the fourth year companies have been required to publish the ratios. Supply and demand CEO pay, on average, increased last year because it's tightly linked to stock performance, and the market performed well in 2020 despite the pandemic, said Ryan Coles, an assistant professor of management at the UConn School of Business. Other factors pushing CEO pay upward long term, Coles said, include public policy decisions starting in the 1980s like deregulation and lower taxes that shifted power and influence upward within companies. Fundamentally, ever-rising CEO pay is about supply and demand, said Fred McKinney, a Quinnipiac University business professor. "These corporations are like teams looking for the talent that will get that company to a higher level of success," he said. "The supply of the people that are being considered for these positions is a fairly small group. They are rewarded for their success or their connections." Potential moves by the Biden administration and the post-pandemic labor shortage may help bolster the increased bargaining power of workers at major companies, said David Cadden, professor emeritus of entrepreneurship and strategy at Quinnipiac University. "It looks as though COVID may have given an advantage to some of the lower-paid workers," Cadden said. "There will be a slight decline in that ratio, because there's an uptick in the lower pay scale of the employees in these corporations." But major structural change within companies would be needed to change course on compensation trends due to passivity of most boards of directors, which hire, pay and fire CEOS, Cadden said. Greg Reilly, a business professor at UConn, said a skilled CEO can add billions to the value of a company, create thousands of jobs and grow the economy for everyone. "Some people are really worth what they're paid," he said. FOCUS: WEALTHIEST PEOPLE Member FDIC/Member DIF We help guide your business like it is our business. Meet our team at bankatpeoples.com/businessteam Real smart solutions for businesses of any size. Greg Reilly Fred McKinney

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