Thursday, October 5, 2023
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It takes a typical employee two lives to equal the annual salary of a CEO

After skyrocketing for years, pay increases for company CEOs (see a change o) have finally slowed down.

The typical compensation package for CEOs running an S&P 500 company rose just 0.9% last year to $14.8 million, according to data analyzed by Equalor for The Associated Press. This means that half of the CEOs surveyed earned more and the other half earned less. This was the smallest increase since 2015.

However, this is unlikely to ease growing criticism that CEO pay has become too high and that the imbalance between company owners and ordinary employees is too great. Resentment over that gap has helped fuel labor unrest, even as some institutional investors have rejected some of the sizable compensation packages.

The smallest increase comes after a 17% increase in CEO pay for 2021, when boards reward top executives for guiding their companies through the coronavirus pandemic-induced downturn.

Several compensation packages have been approved for early 2022, but even a small increase could look bleak against the backdrop of a year in which stock markets posted their worst performance since 2008, inflation pushed salary gains Wrecked, recession fears loom and tech giants begin laying off employees.

“I’m not surprised that wage growth has slowed down a bit after two consecutive record years,” said Sarah Anderson, who directs the Global Economy Project at the Progressive Institute for Policy Studies. “Let’s not forget that by historical measures CEO pay is still through the roof.” He said even the small increase from last year was “outrageous”.

In contrast to recent years, the CEO pay increase was less than the 5.1% increase in wages and net profits of private sector workers through 2022.

However, workers’ wages have not been able to keep up with inflation, which stood at 6.4% at the end of last year. And the pay gap between CEOs and front-line workers, which had been widening for years, narrowed slightly.

The median pay for workers at the companies covered by the AP survey was $77,178, up 1.3% from $76,160 a year earlier. That means it would take 186 years for that employee to equal what a CEO earned last year at the average salary. In the same group of companies in 2021, it would have taken 190 years.

The timing of some of the biggest pay packages being given was against the backdrop of tough times for their industries.

Alphabet CEO Sundar Pichai ranked first in AP’s salary survey this year with a package of nearly $226 million. Most of his compensation came from restricted stock grants, valued at $218 million, that Google gives to its CEOs every three years.

The Google leader won’t receive most of the benefits of the stock awards immediately, and how much he ultimately receives depends on how Alphabet’s shares perform. The company noted in its annual statement that compared to stock awards for Pichai in 2019, a larger portion of the latest batch will be granted only if the company meets shareholder return targets.

Still, Pichai received a total compensation package 15 times the average CEO pay this year, just before Google laid off thousands of employees. The company’s total shareholder return fell 39% last year.

Stephen McMurtry, a software engineer at Google and member of the Alphabet workers union-CWA, said that when Pichai told employees shortly after the layoffs that executives would receive a significant cut on bonuses in 2023, he was not impressed because “the bonuses are too low.” ” portion of executive compensation that is primarily stock-based.” Pichai did not receive a bonus in 2022.

“The disparity between executive awards and those of our unemployed former coworkers erodes trust and underscores the need for further transparency,” McMurtry said in an emailed statement to the AP.

Like many companies, the equity portion of Alphabet’s executive compensation is designed to reflect results over several years. Since Pichai became CEO in 2015, Alphabet’s shares have nearly quadrupled and the company has become the third most valuable company on Wall Street.

Alphabet declined to comment beyond its proxy statement.

Nearly 130 CEOs in the AP survey took a pay cut last year. Among them, UPS CEO Carol Tomey received a total compensation package valued at approximately $19 million, most of it in stock awards. This is down 31% from the $27.6 million it received in 2021. UPS said Tome’s compensation was less because he did not beat performance goals in 2022 by the same margin as he did in 2021.

Tomey is trying to avoid a potentially crippling walkout by union workers who feel they saw little of the company’s losses, which nearly tripled during the pandemic as consumers became increasingly dependent on delivery.

“I don’t feel bad for him because he got shorted,” said Jimmy Hadley, a UPS package driver and a Teamsters (truck driver) shop steward in Roswell, Georgia. “Nineteen crores? Most employees will never earn it in their entire lives.”

Tom’s salary was 364 times the average salary of $52,144 for UPS employees, although the company notes that the average salary for full-time drivers is $95,000. UPS says its executive pay is “in the middle compared to other companies of similar size and global scale.”

Some boards withhold CEO compensation following disapproval by institutional investors, who have the opportunity to vote on the “say on pay” tally at annual shareholder meetings, although such votes are only advisory and do not allow the board to make changes. Do not force.

For example, homebuilder Lennar capped the annual cash bonuses for its co-CEOs Rick Beckwitt and Jonathan Jaffe to $6 million each in response to investor complaints about their $16.6 million bonuses. . Pay package at last year’s shareholder meeting compared to 84% in 2021.

Beckwitt and Jaffe reduced their total compensation by 11% and 12%, respectively, to $30.4 million and $30 million in 2022.

Further up the pay scale, Apple CEO Tim Cook was ranked No. 3 in the AP poll with a compensation package valued at $99.4 million, almost identical to the package offered by Apple in 2021. But Cook responded by requesting a 40% pay cut for 2023. to vote at last year’s annual meeting, where just 64% of shareholders approved Cook’s pay package, up from 94% the year before.

However, such shareholder protest is still rare. Most of the companies included in the AP poll received more than 90% support for their executive compensation programs in 2022.

The AP and Equivalent Compensation study included salary data for 343 CEOs at S&P 500 companies who have worked at their companies for at least two fiscal years, who filed proxy statements between January 1 and January 30. april. Some well-paid CEOs are not included because they do not meet the criteria, such as Andy Jassy of Amazon and Satya Nadella of Microsoft.

The biggest cut in CEO pay last year was in annual performance-based cash awards, which fell 15.5% to an average of $2.3 million. Stock awards, on the other hand, increased by 10.5% to an average of $8.5 million.

Cash pay and bonuses account for less than a quarter of the typical CEO’s compensation in the survey. Much of this comes from stocks and stock options as shareholders advocate for tying top-manager pay more closely to their own returns.

Executives could see significant pay cuts in 2023 when the board considers the full impact of the stock market downturn, said Kelly Malafis, partner at the consulting firm Compensation Advisory Partners, who works with the board.

“We’re not looking at slash-and-burn companies,” Malafis said. “We may see some of that next year.”

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com/
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