This Company Caps CEO Pay Depending on How Much Its Lowest-Paid Employee Makes The highest-paid executive can only make five times as much as the lowest-paid employee.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- Dr. Bronner’s, a 150-year-old family-owned business focused on soap and other household items, revealed its 5-to-1 salary cap on social media last week.
- The highest-paid employee's salary is capped at five times more than the lowest-paid employee.
- CEO compensation can be hundreds of times higher than what even middle-of-the-ladder workers make — the cap pay at the top of Dr. Bronner's is around $238,560, per Entrepreneur's calculations.
Dr. Bronner's estimates that a bottle of its soap is sold every two seconds — but the 150-year-old, family-owned business stands for more than just the products it puts on the shelves.
A social media post from Dr. Bronner's last week revealed an internal aspect of its business: the soapmaker limits the salary of its highest-paid executives to five times the lowest-paid, fully vested employee. (Fully vested means someone who is full-time and has been with the company for at least five years.)
"An ethical company should pay a fair salary and good benefits and enable people to make ends meet on the wages they receive," CEO David Bronner said, adding, "We're really trying to set an example of just being reasonable."
Dr. Bronner's 2023 earnings report details that the company generated over $170 million in revenue in 2022, with 86.7% of its sales conducted in the U.S. The soapmaker had 311 total U.S. employees and about 73% of its managers were promoted from within.
Dr. Bronner's starting pay for regular, non-temporary employees in 2022 was $24.85 per hour while temporary employee wages started at $21.30 an hour, per the report.
If a full-time employee stayed at the 2022 starting pay for five years, on a forty-hour workweek schedule, they would make $47,712 per year.
That would cap pay at the top of Dr. Bronner's at $238,560, per Entrepreneur's calculations.
Related: Here's Why Most CEOs Don't Take Pay Cuts to Avoid Layoffs
The midpoint salary of a CEO last year was around $1.3 million — over five times the estimated salary of Dr. Bronner's top-paid employee — according to a June study from the Associated Press.
The study tracked CEO pay at S&P 500 companies and found that in half of the firms, "it would take the worker at the middle of the company's pay scale almost 200 years to make what their CEO did."
The midpoint pay package for CEOs, factoring in salary, bonuses, and stock awards, was $16.3 million overall.
Related: These CEOs Have the Biggest Pay Packages in the U.S., According to a New Report
In addition to a salary cap, Dr. Bronner's covers childcare up to $7,500 per family, offers a healthcare plan with no out-of-pocket costs, and provides employees with an organic, vegan meal every day.
Anything the company has left over goes to charitable organizations and other causes. Bronner said in the Instagram video that he lives an "awesome" life and feels "enriched" by the joyful atmosphere in the office.
