December 2019 (Revised May 2020)
Case
HBS Case Collection

Income Inequality and the CEO Pay Ratio at TJX Cos

By: Ethan Rouen and Akari Furukawa

Format:Print
| Language:English
| Pages:18

Abstract

TJX Companies reported a CEO pay ratio of 1,596-to-1 in 2019, leaving board chair Carol Meyrowitz with a host of questions about whether, and how, she could take action to address concerns raised by having one of the highest pay ratios in the S&P 500. As a retail company, TJX had 270,000 employees, many making about $10 an hour. On the other hand, CEO Ernie Hermann made $19 million in 2019 as he successfully steered the company through the tumultuous retail environment. Meant to be read in tandem with the research note “Income Inequity and Income Inequality,” this case examines the current disclosures companies make related to income inequality and asks whether they are sufficient or how they can be improved. This discussion around disclosure also provides opportunities to examine the role of the firm in creating income inequality and how the firm should balance its obligations to shareholders and employees when those obligations may be in conflict. Lastly, the case and note address the CEO pay setting process to give students an understanding of how pay is determined.

Keywords

CEO Pay Ratio; Income; Equality and Inequality; Executive Compensation; Corporate Disclosure; Business and Stakeholder Relations

Citation

Rouen, Ethan, and Akari Furukawa. "Income Inequality and the CEO Pay Ratio at TJX Cos." Harvard Business School Case 120-063, December 2019. (Revised May 2020.)