Honeywell International Inc., the New Jersey-based global software-industrial company whose roots date back to 1885 in Minneapolis, became the first major U.S. public company to disclose it’s ratio of CEO pay to that of the median employee.
Their pay ratio for 2017 was 333:1. Some other interesting numbers from that filing: compensation for the median employee at Honeywell was $50,296; the annualized compensation for CEO Darius Adamczyk to determine the pay ratio was $16,753,438; and the total number of Honeywell employees was 143,119.
Public companies this year are required to make the disclosure as part of the 2010 Dodd-Frank Act. Honeywell made the disclosure in a preliminary proxy filed on Friday.
The disclosure by Honeywell not only highlights the discrepancy in pay between the CEO and employees it also illustrates some of the complexities that go into calculating the number.
Among them Adamczyk was named CEO on March 31, 2017. For purposes of the calculation Honeywell used Adamczyk’s salary and the annual incentive bonus as if he started Jan. 1 as CEO.
In the summary compensation table of the proxy Adamczyk’s compensation was listed as $16,500,153. By adjusting his salary and bonus figure the compensation used for the pay ratio was $16,753,438 which resulted in a higher pay ratio of 333:1 compared to 328:1.
The CEO pay ratio rule also allows companies to exclude as much as 5 percent of foreign employees from the calculation. If they do so they must make additional disclosures about foreign workers. Because of the additional disclosure we know Honeywell has 57,027 employees in the U.S. and 86,092 non-U.S. employees.
Honeywell, as allowed under the rule, excluded a total of 7,040 employees from 27 foreign countries including 1,701 employees from Slovakia and 1,008 from Brazil.
It was not disclosed how much that exclusion affected the pay ratio. The assumption is that companies will exclude lower paid foreign workers which would mean the compensation of the median employee would be higher and CEO pay ratio figure lower.
Honeywell’s CEO pay ratio will likely be on the high end of the range among companies reporting this year. A pre-season survey by Equilar, an executive compensation and corporate governance data firm, showed that the median CEO Pay ratio number in the U.S. will be around 140:1.