U.S. executives are on track to reap record rewards this year, raising the prospect of new clashes with investors and employees as the gap between their earnings and that of their staff widens to a historic multiple in the wake of the Covid-19 pandemic.
For the 280 S&P 500 companies that have reported figures so far this year, the average CEO’s salary has risen to a record $ 14.2 million for 2021 from $ 13.5 million for 2020, according to ISS Corporate Solutions, a data provider.
Equilar, another data company that tracks CEO rewards at the largest companies by revenue, said the median among 196 companies reporting this year rose 20 percent to $ 14.3 million, after falling to $ 12 million in 2020 has.
Among the biggest salary packages for CEOs announced so far are David Zaslav’s $ 247 million at Discovery, Pat Gelsinger’s $ 178.6 million at Intel, and Andy Jassy’s $ 212.7 million at Amazon – announced on the same day that workers in New York voted to establish Amazon. first American union.
CEO pay ratios, which compare a CEO’s total annual salary to that of the average company employee, are also on track to break a record after a sharp stock market boom delivered much greater windfall to executives than to their employees.
The median ratio has shot up to 245 for 2021 from 192 for 2020, Equilar said. If the trend continues, “it will be the largest year-on-year increase since the ratio became a required disclosure by the Securities and Exchange Commission during the 2018 proxy season,” Equilar said.
Amazon, for example, said last week that Jassy’s salary for 2021 was 6,474 times that of its median employee. In 2020, his last full year as CEO, Amazon founder Jeff Bezos earned 58 times more than the average employee.
Part of the jump in executive salaries stems from bonuses that were interrupted or reduced in 2020 during the pandemic. Cruise operator Carnival, for example, did not pay its principal, Donald Arnold, an annual bonus in 2020, but the $ 6 million bonus he gave for 2021 raised his total salary from $ 13.3 million to $ 15 million. Other companies have meanwhile rewritten managers’ bonus plans to ensure the pandemic does not face them with huge salary cuts.
Bonus payouts, many of them agreed when the pandemic began to ease, were “the major driver” of last year’s increase in CEOs’ packages, said Brian Johnson, executive director of ISS Corporate Solutions.
Some executives have offered concessions to investors who are worried about excessive rewards. Larry Culp, the General Electric chairman and CEO who faced a similar shareholder protest last year, agreed in March to reduce his annual share incentive grant by $ 10 million.
But shareholders have shown willingness to challenge big bonuses at various companies in 2022. Only 64 percent of Apple shareholders endorsed Tim Cook’s 2021 payment in February, with Norwegian oil fund and investment fund Engine no. 1 among the shareholders who voted against the package.
Power of Attorney Institutional Shareholder Services has recommended that shareholders of Discovery protest against Zaslav’s pay package.
Activist investor Carl Icahn last week reprimanded the grocery store chain Kroger for its 909 to 1 payout ratio in 2020, which he described as “unscrupulous” and “obscene”. Kroger has not yet submitted pay figures for 2021.