CEO Compensation at Starbucks and Abercrombie & Fitch Outmatches Median Yearly Wage of Employees by Over 6000-Fold
In 2024, the CEO-to-worker pay gap for S&P 500 companies remained a contentious issue, with the average ratio reaching 285 times. This gap was particularly pronounced at Abercrombie & Fitch and Starbucks, where CEOs were compensated over 6,000 times more than the median worker.
Brad Jacobs, the CEO of roofing company QXO, topped the list of highest-paid CEOs in 2024, with compensation of over $189 million. Peter Gassner of software company Veeva Systems and Patrick Smith of technology and weapons company Axon Enterprise were also among the highest-paid, earning over $172 million and $164 million, respectively.
However, it was Abercrombie & Fitch and Starbucks that attracted the most attention due to their large CEO-to-worker pay gaps. Fran Horowitz, CEO of Abercrombie & Fitch, earned approximately $17 million in 2024, while the median worker made only $2,531. This created a pay ratio of 6,731-to-1. Starbucks’ CEO Brian Niccol earned nearly $96 million in 2024, while the median worker earned $14,674, resulting in a pay ratio of 6,666-to-1.
These enormous disparities are due to both the massive CEO compensation packages and the fact that the workforce largely consists of thousands of hourly employees earning relatively low wages. At Abercrombie, the median hourly wage ranges from minimum wage to $37.47 per hour, while the average hourly wage at Starbucks is $19 per hour.
Both companies employ thousands of hourly workers. Abercrombie employs approximately 32,600 hourly workers, and Starbucks employs 400,000 global employees. The AFL-CIO's annual Executive Paywatch report, based on filings the companies submitted to the U.S. Securities and Exchange Commission, found that Abercrombie & Fitch and Starbucks were the two companies with the highest pay differences between CEOs and median workers in 2024.
The high CEO-to-worker pay ratios have raised concerns about their impact on employee morale and productivity. The Madison Trust Company, an investment firm with $5.5 billion in assets, agrees that such ratios can be detrimental.
The issue of CEO compensation continues to be a topic of discussion, with the AFL-CIO's report shedding light on the disparities between CEO pay and median worker pay. The average CEO received a $1.24 million raise last year, a 7% increase from 2023, for an average total compensation of $18.9 million. Meanwhile, the median U.S. worker received a 3% raise from 2023 to 2024, with earnings reaching $49,500 in 2024.
Related articles include "'We're Not Effective': Starbucks CEO Tells Corporate Employees to 'Own Whether or Not This Place Grows'" and "'Feels Like a Slap in the Face': Some JPMorgan Employees Reportedly Aren't Happy With Their Bonuses". However, access to these articles requires a subscription.
[1] Source: AFL-CIO's Executive Paywatch Report 2024 [2] Source: U.S. Securities and Exchange Commission filings [3] Source: Starbucks 2024 Annual Report, Abercrombie & Fitch 2024 Annual Report
- The enormous pay gaps between CEOs and workers are a contentious issue in business, particularly in the cases of Abercrombie & Fitch and Starbucks, where CEO compensation is over 6,000 times more than the median worker.
- The high CEO-to-worker pay ratios are of concern, as they may impact employee morale and productivity, according to the Madison Trust Company, an investment firm.
- Technology and policy-and-legislation are potential areas for change, as the issue of CEO compensation continues to be a topic of discussion, often influenced by finance and politics.
- Success in scaling businesses may not be directly linked to high CEO compensation, as companies like Abercrombie & Fitch and Starbucks, with large workforces of hourly employees, have high CEO-to-worker pay ratios.
- The finance sector closely follows the news of CEO compensation, with reports like the AFL-CIO's Executive Paywatch and company annual reports offering insights into the disparities between CEO pay and median worker pay.
- General news outlets have covered the criticisms faced by CEOs in business, such as Starbucks' Brian Niccol and Abercrombie & Fitch's Fran Horowitz, who were among the highest-paid CEOs in 2024, with compensation exceeding $14 million and $17 million, respectively.
