Honeywell has become the first large US corporation to report the ratio between its CEO and median worker compensation, in compliance with a new Securities and Exchange Commision regulation based on the 2010 Dodd-Frank financial reform legislation.
Honeywell, a Fortune 100 company that concentrates on manufacturing technologies, included the pay ratio information in a preliminary proxy statement posted on the SEC web site after 5 p.m. on Friday, February 16.
Two particularly noteworthy revelations stand out in the Honeywell disclosure.
The first: 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. The median worker pay at the firm: $50,296.
The second: 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 ratio disclosure rule, companies have two ways to exclude non-US employees from their calculation of median worker pay.
If a company’s non-US employees account for 5 percent or less of its total employees, the firm may exclude all of those employees when making its pay ratio calculations. But in this circumstance, if the company chooses to exclude any non-US employees, it must exclude all of them.
If a company’s non-US employees exceed 5 percent of its total US and non-US employees, the firm may exclude up to 5 percent of its total employees who are non-US employees. Honeywell, with 86,092 non-US workers and 57,027 US employees, falls in this…