Business

For the first time, we now know how much Charlotte firms pay the average worker

A new federal rule is making public companies in Charlotte and elsewhere divulge what they pay their average workers, revealing for the first time how they compensate their rank and file.
A new federal rule is making public companies in Charlotte and elsewhere divulge what they pay their average workers, revealing for the first time how they compensate their rank and file.

Duke Energy workers have a reason to brag.

When it comes to median compensation for employees — meaning half the pay is above and half is below that amount — the utility ranks highest among companies headquartered in the Charlotte region.

Duke's median of $122,365 is tops among 20 companies that publicly released such figures to comply with a federal rule which starts this year. The requirement was mandated by 2010's Dodd-Frank financial-overhaul law, enacted in response to the financial crisis.

At the other end of the spectrum is Cato Corp.

The women's fashion retailer, which operates stores in Charlotte and elsewhere, is last among locally based companies, with its median compensation of $9,682. Cato said the amount reflects the fact that well over half of its employees work part time, and in its proxy said its median worker "is a part-time employee."

The federal rule is making publicly traded companies across the U.S. divulge what they pay their average workers, revealing for the first time how they compensate their rank and file.

Forcing companies to disclose the figures could constrain exorbitant chief executive pay packages, possibly helping to address growing income inequality in the U.S., supporters of the requirement say.

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But critics, including business groups that fiercely opposed the rule, say the disclosures provide little to no value to investors and amount to another unnecessary financial burden for companies. Critics and supporters also note that companies have wide latitude in how they calculate the median figure, making comparisons across firms even in the same industry difficult.

Cato said it used total cash compensation for part- and full-time employees to arrive at its figure. Other retailers also rely heavily on part-time workers, Cato said.

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The Cato at 3124 Eastway Crossing Drive in Charlotte. The U.S. Equal Employment Opportunity Com­mission said Monday that Charlotte-based retailer Cato Corporation has agreed to a $3.5 million settlement after a “nationwide, systemic investigation” into the company uncovered discrimination against pregnant employees and others with disabilities. Katie Peralta kperalta@charlotteobserver.com

"Part-time employment is a welcome choice for many of Cato's associates who are unable to work full time due to education, family and other responsibilities," the company said in a statement. "Cato's compensation compares very favorably to employers in the specialty retail category nationally, as does our ratio of CEO pay to median pay."

Cato has about 1,350 stores, mostly in the Southeast, and employs approximately 720 full- and part-time workers in the Charlotte area.

The federal rule also requires companies to report its ratio of median employee compensation to the annual total compensation of the CEO.

Cato said CEO John Cato's 2017 total compensation of $2.8 million was about 289 times the median worker's.

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That gap was smaller at Duke Energy, which has about 8,300 employees in Mecklenburg County, a figure that does not count contractors.

Duke said it gave CEO Lynn Good $21.4 million in 2017 total compensation. That's roughly 175 times the median worker's figure, which includes salary, annual bonus, pension contributions and 401(k) matches.

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At Duke, many employees hold highly specialized jobs, such as engineers and lineworkers who ride in bucket trucks and repair downed power lines, said Chief Financial Officer Steve Young. Such workers are well-compensated, probably a big factor in the high median compensation figure, Young said.

"We have a lot of engineering workforce here running nuclear plants and complex grid investments," he said. "We have a complex business that requires a very diverse, talented workforce, and we want to make sure they're compensated appropriately."

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Duke Energy linemen work to replace a utility pole in Maitland, Fla., in September 2017 after Hurricane Irma damaged the area. Joe Burbank/Orlando Sentinel/TNS

Among Charlotte-area headquartered companies near the middle for median compensation, paper company Domtar reported $69,047; industrial conglomerate Babcock & Wilcox Enterprises $64,674; and industrial equipment supplier SPX Flow $61,851.

The median figure at some companies not based in Charlotte, but with a large employee presence here, include: Walmart, $19,177; American Airlines, $62,394; and Wells Fargo, $60,446.

Wells Fargo rival Bank of America, which is headquartered in Charlotte, reported a median of $87,115.

Lots of leeway

While the median data provides a window into information companies have kept shielded, questions have emerged about its accuracy.

That's because of the leeway the Securities and Exchange Commission grants employers in how they determine the median figure. For instance, companies in some cases can exclude employees in foreign countries from their calculation.

In a letter to the SEC this year, consumer advocacy group Public Citizen said it was concerned companies might be reporting inaccurately high or low medians to produce a CEO pay ratio they desire. The group noted "considerable" variations among the medians at similar firms and urged the SEC to investigate.

In an interview, Bartlett Naylor, financial policy advocate at Public Citizen, said, "There needs to be careful scrutiny as to how companies are counting compensation." Despite such concerns, Naylor said his group, which pushed for implementation of the rule, believes the disclosures remain valuable.

For investors, the tool was never meant to be the first thing to analyze when considering whether to invest in a company, Naylor said. But when investors are comparing similar companies, lower median pay at one could mean there's a problem with employee morale, which could hurt that firm's performance, Naylor said.

"This is part of the mosaic that is improved as you make a decision," he said.

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