US executives rake in record pay as historic income gap opens with staff

US CEOs are on track to reap record rewards this year, raising the prospect of further clashes with investors and employees as the gap between their earnings and those of their staff widens to a multiple history following the Covid-19 pandemic.

For the 280 S&P 500 companies that have released numbers so far this year, the median CEO salary jumped 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 awards for the biggest companies by revenue, said the median among the 196 companies reporting this year jumped 20% to $14.3 million after having dropped to $12 million in 2020.

Among the largest executive pay packages announced to date include David Zaslav’s $247 million at Discovery, Pat Gelsinger’s $178.6 million at Intel and Andy Jassy’s $212.7 million at Amazon – which were made public the same day New York workers voted to form Amazon. first American union.

CEO pay ratios, which compare the total annual salary of a chief executive to that of the company’s median employee, are also on track to hit a record high after a strong stock market rally provided gains far more important to managers than to their employees.

The median ratio rose to 245 for 2021 from 192 for 2020, Equilar said. If the trend continues, “it would be the largest year-over-year increase since the ratio became a Securities and Exchange Commission disclosure requirement 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 chief, Amazon founder Jeff Bezos earned 58 times more than the median employee.

Part of the rise in executive compensation stems from bonuses halted or reduced in 2020 during the pandemic. Cruise line Carnival, for example, didn’t pay its boss, Donald Arnold, an annual bonus in 2020, but the $6 million bonus he gave him for 2021 boosted his total salary by 13, $3 million to $15 million. Meanwhile, other companies rewrote executive bonus plans to ensure the pandemic would not expose them to deep pay cuts.

Bonus payouts, which many agreed to as the pandemic began to ease, were “the big driver” of the increase in CEO packages last year, said Brian Johnson, chief executive of ISS Corporate. Solutions.

Some executives have offered concessions to investors concerned about excessive rewards. Larry Culp, chairman and CEO of General Electric, which faced a similar shareholder protest last year, agreed in March to cut its annual stock incentive by $10 million.

But shareholders have shown their willingness to challenge large bonuses from several companies in 2022. Only 64% of Apple shareholders approved Tim Cook’s 2021 salary in February, the Norwegian oil fund and the investment fund Engine No 1 among shareholders who voted against the package.

Proxy advisor Institutional Shareholder Services recommended that Discovery shareholders protest Zaslav’s salary package.

Carl Icahn, the activist investor, last week chastised grocery chain Kroger for its 909-to-1 pay ratio in 2020, which he described as “unconscionable” and “obscene”. Kroger has yet to file compensation figures for 2021.

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