Bank of Hawaii Chief Executive Officer Peter Ho made nearly $4.7 million last year. In contrast, the median worker at the bank with 2,139 employees made $57,060 — 82 times less than their boss.
Publicly traded companies disclosed for the first time this year their pay ratios in filings with the federal Securities and Exchange Commission, part of a mandate from the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.
The salaries cited in this article include part-time and temporary workers along with full-time staff and also take into account benefits like stock awards on top of base incomes.
The filings show significant pay disparities between chief executive officers at large national companies that operate in Hawaii. In the islands, the pay differences were smaller and several companies had ratios that were less than the national median.
Mark B. Dunkerley, who recently stepped down as CEO of Hawaiian Holdings — the parent company of Hawaiian Airlines — made $3,848,649 last year. The median compensation for employees was $71,298 and the company reported its CEO-to-worker pay ratio as 53.98 to 1.
Eric Mais, a finance professor at University of Hawaii Shidler College of Business, says it makes sense that Hawaii-based companies would have lower pay disparities because executive compensation fluctuates depending on industry and company size.
But even in Hawaii there’s lots of variation.
A. Catherine Ngo, president and CEO of Central Pacific Financial Corp., made just over $1 million last year. The local bank is relatively small with 839 employees. With the median employee salary at $58,058, the pay ratio for the local bank was 17.64 to 1, far less than many publicly traded Hawaii companies.
At Territorial Bancorp — which boasts Honolulu Mayor Kirk Caldwell as a board member — the CEO-to-worker pay ratio is 35 to 1. CEO Allan S. Kitagawa made $1,868,549 last year compared with the $53,960 median salary for company employees.
Employees at Hawaiian Electric Industries are doing a lot better with median compensation at $126,857. CEO Constance Lau is doing well too — pulling in more than $5.9 million last year, 47 times more than the median worker at the utility.
Nicole Woo is an advocate at the Hawaii Appleseed Center for Law and Economic Justice who lobbied for the Dodd-Frank Act when she worked at the Center for Economic and Policy Research in Washington, D.C. She says it’s encouraging that several companies in Hawaii have pay disparities that are lower than the national median.
As of May 28, the median pay ratio across more than 2,000 corporations was 67 to 1, according to the Equilar CEO Pay Tracker.
Woo noted that other states and municipalities are considering legislation to penalize companies if their pay disparities are too high and thinks that’s something worth considering in Hawaii.
“Working class people and middle class people are struggling and any way we can encourage corporations to transfer money from people at the top to everyday workers could be helpful,” she says.
Pay disparities between head honchos and median employees are a lot bigger at large national companies that operate in Hawaii.
Take Howard Hughes Corp.: CEO David R. Weinreb made close to $8 million last year, a ratio of 118 to 1 compared to the median salary which was $61,177. The Dallas-based developer’s new skyscrapers in Kakaako are transforming Honolulu’s skyline.
The pay disparity was similar at United Airlines. CEO Oscar Munoz’s compensation exceeded $9.5 million last year compared to the median salary of $83,122 for a ratio of 115 to 1. The airlines is under pressure locally to allow its catering workers in Honolulu and four other cities to unionize.
At CVS Health, which owns Longs Drugs, the pay ratio is even bigger at 320 to 1. The median employee salary was $38,372, while CEO Larry Merlo received more than $12.2 million last year.
At McDonald’s Corp., CEO Steve Easterbrook earned 3,101 times more than the median worker. The median salary was just $7,017, whereas Easterbrook’s compensation surpassed $21.7 million last year.
The huge disparity is partially attributable to the fact that the median salary includes part-time workers. Critics say this unfairly deflates the median wage and inflates the ratio.
Mais from Shidler College of Business says more information — such as knowing the bottom quartile and top quartile salaries — would help. But it would be expensive. Compliance with the existing rule is expected to cost corporate America $1.3 billion alone in the first year and $526 million each year in subsequent years.
Mais says the pay ratio information is still significant because it’s the first time that companies have been required to share not only the disparity but the median employee salary.
The news could affect worker productivity as well as attitudes toward a company if workers find out they’re in the lower half of median incomes.
“It will be interesting to see how that conversation plays out at the water cooler,” Mais says. “Most companies are very secretive about people’s salaries. This is breaking down some of that privacy about compensation.”
Below is a table of the executive compensation ratios of some large public corporations based in Hawaii. The list is not exhaustive and is based on available filings: