For Immediate Release

Organization Profile: 

In Landmark First CEO-Worker Pay Ratio Disclosure by a Large U.S. Corporation, Honeywell Reveals a 333:1 Gap between CEO and Typical Worker Pay

WASHINGTON - Honeywell has become the first large U.S. corporation to report the ratio between its CEO and median worker compensation, in compliance with a new SEC regulation based on the 2010 Dodd-Frank financial reform legislation. For background on this new disclosure rule, see this Institute for Policy Studies paper.

Honeywell included the information in a preliminary proxy statement posted on the SEC web site after 5 p.m. on Friday, February 16.

Two particularly noteworthy revelations in the Honeywell report: 

1.Honeywell CEO Darius Adamczyk, with only nine months of experience in his chief executive job, made 333 times as much in 2017 as the median Honeywell worker. Adamczyk replaced long-time Honeywell CEO David Cote in April 2017. To calculate the CEO-worker pay ratio, Honeywell annualized Adamczyk’s compensation, coming up with a total of $16.5 million. Median worker pay at the firm was $50,296.  

2.The Honeywell pay ratio disclosure reveals previously unreleased information about the extent of the company’s offshoring of jobs. Honeywell revealed this information because the SEC pay ratio rule allows companies to exclude some of their foreign-based workers from the calculation of median worker pay. But companies that go this route must make additional disclosures. 

Under the SEC regulation, companies have two ways to exclude non-U.S. employees from their calculation of median worker pay:

  • If the company’s non-U.S. employees account for 5 percent or less of its total employees, it may exclude all of those employees when making its pay ratio calculations. But in this circumstance, if the company chooses to exclude any non-U.S. employees, it must exclude all of them.
  • If a company’s non-U.S. employees exceed 5 percent of its total U.S. and non-U.S. employees, it may exclude up to 5 percent of its total employees who are non-U.S. employees. This is the situation for Honeywell, which reports 86,092 non-U.S. workers and 57,027 U.S. employees. 

Firms have an obvious incentive to exclude non-U.S. employees from low-wage countries from their media worker calculations. The more low-wage workers they exclude, the higher the overall corporate median pay will be — and the less outrageously overpaid the company’s CEO will appear.  But if companies in Honeywell’s situation exclude any workers from a foreign nation, they must exclude all non-U.S. employees in that nation and report the number of employees in each nation being excluded. 

Honeywell lists 27 countries where it has excluded a total of 7,040 employees. This list of countries does not include any Western European countries or Japan, all higher-wage nations. As a result, the 333:1 ratio that Honeywell is reporting most likely would be even wider if Honeywell took all its workers into account.

“This new pay ratio data is long overdue and will be put to good use by shareholders, workers, consumers, and policymakers interested in narrowing our country’s economic divide,” said IPS executive compensation expert Sarah Anderson. “We’re expecting it to give a big boost to efforts to leverage the power of the public purse against the extreme economic inequality that existing corporate pay practices so routinely generate.” 

A new IPS policy brief details initiatives in several states and cities to tie CEO-worker pay ratios to tax, procurement, and subsidy policies.

Experts available for interviews: 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and co-edits the IPS web site She has been the lead author on all 24 of the Institute’s annual Executive Excess reports. Her executive compensation analysis has been featured in the New York Times and many other outlets. 787 5227

Sam Pizzigati, an IPS associate fellow, is also a co-editor of His latest book, The Case for a Maximum Wage, will appear this spring.


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