Pay Equity Trends in Corporate America
Since the SEC began requiring CEO pay ratio disclosures, researchers have built the first consistent dataset of executive-to-worker pay inequality. Here's what the data shows.
| Year | Median Ratio | Avg Ratio | Median CEO Pay |
|---|---|---|---|
| FY2021 | 73:1 | 92:1 | $5.4M |
| FY2022 | 61:1 | 72:1 | $4.4M |
| FY2023 | 151:1 | 219:1 | $7.1M |
The History of Pay Ratio Disclosure
Section 953(b) of the Dodd-Frank Act was passed in 2010 but took seven years to implement. The SEC's final rule, adopted in 2015, required companies to disclose their CEO pay ratio starting with proxy statements for fiscal years beginning on or after January 1, 2017.
This gave researchers their first consistent, legally-required dataset for measuring executive pay inequality at scale. Before Dodd-Frank, companies disclosed CEO pay but not median employee pay, making ratio calculations difficult and inconsistent.
What the Data Shows
Early research on pay ratio data revealed several important patterns:
- Ratios are much higher in labor-intensive industries: Retail, food service, and entertainment companies — with large workforces of hourly and part-time workers — consistently show the highest ratios.
- Equity-driven industries show extreme outliers: Technology and biotech companies can show spectacular ratios in years when CEOs receive large equity grants, even if the business model relies on well-paid knowledge workers.
- Size matters, but not linearly: Larger companies don't consistently show higher ratios than smaller ones once you control for industry.
- International workforces drive ratios up: Companies with large numbers of employees in developing markets tend to show higher ratios because the median employee's pay is low in absolute terms.
Has Pay Equity Improved Since Disclosure?
The research is mixed. Some studies suggest that mandatory disclosure has created modest pressure on boards to moderate pay packages at companies with very high ratios — particularly after shareholder say-on-pay votes. But other analyses find that CEO pay has continued to grow faster than median worker pay on average.
Tight labor markets in 2021–2023 did boost median employee wages for many companies, which temporarily reduced ratios. But as those pressures eased and equity markets recovered, CEO equity grants rebounded.
The "say-on-pay" feedback loop
Section 951 of Dodd-Frank gives shareholders a non-binding annual vote on executive compensation. Boards typically treat sub-70% support as a yellow flag and sub-50% as a red flag triggering pay redesign. Companies whose ratio sits above the 90th percentile of their sector see materially higher no-vote rates — roughly 12 percentage points higher in academic studies of post-2017 votes.
Worked example: a 1,200:1 ratio interpreted
A retailer reporting a 1,200:1 ratio with a $14M CEO and an $11,667 median employee illustrates the workforce-composition issue. If 70% of that workforce is part-time hourly (say, 25 hours/week at $14/hour), the median employee earns roughly $18,200 annualized — but on a per-hour basis, $14 is materially above the federal $7.25 minimum. Reading the 1,200:1 ratio without checking workforce composition can mislead.
Industry Variation
Perhaps the most striking finding from pay ratio data is how much industry matters. Companies in the same S&P 500 index can have ratios ranging from under 20:1 to over 2,000:1. This variation makes cross-company comparisons without industry context nearly meaningless.
PlainCEOPay provides industry benchmarks for all 84 tracked industries. Use the industry comparison tool to see where any company stands relative to peers.
Looking Ahead
As ESG (environmental, social, and governance) investing grows, CEO pay ratios are increasingly used as a social metric by institutional investors. Shareholder proposals on pay equity are becoming more common, and some companies have begun voluntarily disclosing additional pay equity metrics beyond the SEC-required ratio.
SEC pay-versus-performance rule (effective FY2023)
The SEC's pay-versus-performance disclosure now requires a separate table reconciling "compensation actually paid" (CAP) against TSR and net income for the principal executive officer and other named executives over the prior five fiscal years. CAP differs sharply from grant-date fair value during volatile years — in 2022 many tech CAP figures were materially negative even when SCT total compensation was eight figures.
Watch for: median employee methodology resets
Companies are required to recalculate their median employee at least every three years, but may do so sooner if the workforce composition has changed materially. A reset year often produces a visibly different ratio — review the proxy footnote labeled "Identification of Median Employee" to confirm whether a year-over-year ratio change reflects pay shifts or methodology shifts.
FAQ
Has CEO pay grown faster than worker pay?
Over the long run, yes. Economic Policy Institute research shows that CEO compensation has grown dramatically faster than typical worker pay over the past four decades. However, the pay ratio data only goes back to 2017, making longer-term analysis within this dataset impossible.
Does a high pay ratio mean workers are paid unfairly?
Not necessarily. A company can have a very high pay ratio while paying workers at or above market wages, simply because the CEO received an exceptionally large equity grant. Context matters — look at actual median employee pay, industry benchmarks, and year-over-year trends together.