Total compensation has increased by at least 12% for most executives, and most companies have recorded annual shareholder returns of almost 30%, according to a Wall Street Journal analysis of data from more than 400 companies. from MyLogIQ LLC.
Much of the compensation consisted of stock awards that may ultimately turn out to be larger or smaller than those initially declared. The median salary, bonuses and other cash compensation was $4.1 million.
In 2020, the median salary package was $13.4 million for the same companies, with median cash compensation of $3.1 million.
Large stock rewards and multi-year compensation packages have pushed salaries to the top of the latest WSJ rankings. Nine CEOs received compensation packages worth at least $50 million last year, up from seven in 2020 and one in 2016. The Journal’s analysis uses compensation figures and the value of awards from shares as reported by companies in their securities filings, usually before gains or declines in market activity or performance multipliers.
About two-thirds of CEO compensation comes in the form of stock awards or stock options, which typically vest over several years. For the 25 highest-paid CEOs, each of whom was over $35 million, equity accounted for 78% of their total compensation. Again, the highest paid CEOs were concentrated in the technology and media sectors.
Boards of directors have emphasized equity awards over the years, in part because institutional investors have pushed to better align executive compensation with shareholder returns. Some big investors are also calling for tying CEO compensation to climate, diversity and other metrics. Still others worry that complex packages will weaken the links between pay and performance.
Business leaders weathered a tumultuous year that began with Covid-19 disrupting operations and undermining demand, and ended with an economic rebound that left many American businesses scrambling for workers and trying to keep ahead of rising inflation. The impact of the pandemic and the recovery was evident in the analysis: the second most successful company developed a vaccine against Covid; the highest-paid executive ran an online travel site.
Here’s a look at the CEOs who did the most and the least in 2021, as well as those whose companies produced the best and worst returns for shareholders. At the bottom, explore a table with compensation data for all the CEOs in the analysis.
Peter Kern received a $296 million compensation package from online travel company Expedia Group Inc., the highest in the Journal’s analysis. Mr. Kern, a longtime media and private equity executive, took over the company in April 2020 at the height of the pandemic.
An Expedia spokesperson credited his efforts to navigate the pandemic and position the company to thrive. Mr. Kern’s equity awards, which made up nearly all of his package, will not begin vesting until 2024 at the earliest, and the CEO is not expected to receive any additional shares during his employment contract. three years, the spokesperson added.
Several of the larger packages include stock awards tied to ambitious stock price targets. David Zaslav, the longtime executive of Discovery Inc., received compensation valued at approximately $246 million. This package included a $203 million option grant that is contingent on the share price doubling from current levels by December 2027.
Mr. Zaslav, who now leads the new Warner Bros. merger. Discovery Inc., “would have to create tens of billions of dollars in shareholder value to take advantage of 82% of that compensation figure,” a spokesperson said.
ServiceNow Inc. boss Bill McDermott reportedly needs the cloud company’s share price to rise about half from current levels, in addition to hitting subscription revenue targets, for one of his $139.2 million option grants to be in the money, according to the company. Proxy. In addition, a restricted stock award worth $18.6 million could double in value based on improvements in revenue, margin and stock price, according to the filing.
A ServiceNow spokeswoman said the performance targets are ambitious and credited executive leadership for the company’s market capitalization growth and workplace rewards.
At JPMorgan Chase & Co., Jamie Dimon must wait at least five years to exercise options that the company values at $52.6 million, or nearly two-thirds of his $84.4 million in reported compensation in 2021, and hold the resulting shares for at least another five years. Excluding the special price, Mr. Dimon’s salary rose by less than 0.5%, a spokesperson said.
Apple Inc. said Tim Cook has not received a stock award since becoming CEO in August 2011, and that the size of the 2021 award “recognizes his outstanding leadership and is commensurate with size, performance and to the profitability that Apple has achieved during his tenure”. Apple’s market capitalization was more than $2.3 trillion at Friday’s close, down from about $350 billion when it took over.
Two dozen women led S&P 500 companies throughout 2021, the same number as in 2020. None of them made the top 25 in earnings. The highest paid was Lisa Su, who heads chipmaker Advanced Micro Devices Inc., with a package worth $29.5 million, including $25.1 million in equity. AMD declined to comment.
Several public company CEOs earned more than those in the Journal’s analysis, but weren’t included because they run companies outside the S&P 500 index. These include ad tech firm TradeDesk Inc. ., which brought in $835 million for its chief, and Endeavor Group Holdings Inc., which brought in a $308 million package for its CEO, Ari Emanuel.
Sixteen CEOs of the Journal’s analysis received compensation valued at less than $5 million last year, up from 25 the previous year. Several are CEOs such as Elon Musk and Warren Buffett with stakes in their companies that make them one of the richest people in the world.
Tesla Inc. said it paid Mr. Musk nothing for the second year in a row, after awarding him a record salary in 2018, valued at $2.3 billion at the time. Since then, Mr. Musk has acquired – or obtained full ownership – of 11 of the 12 stock option tranches included in this package. At recent prices, these options would be valued at around $65 billion after exercise. He must generally hold the shares resulting from the options for at least five years. Tesla did not respond to requests for comment.
Mr. Buffett, still one of the lowest-paid CEOs in the S&P 500, got $373,204 from Berkshire Hathaway Inc., with personal and household security costs accounting for all but his $100,000 salary. Berkshire did not respond to requests for comment. Mr. Buffett owns shares in the conglomerate valued at around $110 billion at recent prices.
Some of the lowest-paid CEOs of 2021 were among the highest-paid of 2020. Activision Blizzard Inc. said it paid Bobby Kotick $826,549 after asking for his salary to be reduced and foregoing bonuses and grants in action amid turmoil and government investigations into the video game company’s labor issues. Mr. Kotick was the second highest-paid CEO in the Journal’s 2020 compensation analysis, at $154.6 million, mostly in stocks.
Activision Blizzard posted the third-worst shareholder return in the Journal’s 2021 analysis, at minus 28%. In January, it agreed to be taken over by Microsoft Corp.
A spokeswoman said Activision had outperformed the market since Mr. Kotick took over in 1991. “Mr. Kotick has transformed the company, reshaped the video game industry and delivered tens of billions of dollars in shareholder value,” she said.
Only one of the 25 highest-paid CEOs in the Journal’s analysis ran one of the 25 most successful companies: Gary Dickerson of Applied Materials Inc., who received $35.27 million in compensation in 2021. The manufacturer semiconductor equipment company posted a total shareholder return for the year of 132.6%, well above the median of 29.6%.
A one-time award, designed to reward Mr. Dickerson for five-year share price increases, was about $15 million of his 2021 salary package. Within about a year, due to a surge of Applied Material’s stock price, Mr. Dickerson had acquired the entire award and received additional shares.
Marathon Oil Corp., the top performer, posted a total shareholder return of about 150% year-over-year and said it paid CEO Lee Tillman $13 million. In its proxy, the company said Mr. Tillman’s target salary was down 25% from 2020, to $9 million, but performance metrics led to his bonus and other incentives are above the target.
Covid-19 vaccine maker Moderna Inc., led by Stéphane Bancel, was the second best performing company. Mr. Bancel’s compensation was $18.2 million in 2021, up 41% from 2020. A spokeswoman declined to comment.
One of the top 25 companies, Arista Networks Inc., was led by Jayshree Ullal, whose 2021 compensation was around $16 million. The network equipment manufacturer shows a yield of 97.9%. A spokeswoman for Arista declined to comment.
Five of the 25 worst performing companies in the Journal’s analysis were software and services companies and four were media and entertainment companies.
Penn National Gaming Inc., an online casino and gaming company, had the worst shareholder return in the Journal’s analysis. About $48 million of the $65.9 million package for CEO Jay Snowden reflects incentives designed to only start paying out if the stock price roughly triples from recent levels, a source said. spokesperson. Mr Snowden has yet to win the award, the spokesperson added.
Global Payments Inc., a payment software and technology company, was the second worst performing company. CEO Jeffrey Sloan’s compensation has risen from $15.5 million to $23.3 million, in part because he waived bonus and salary payments in 2020. A spokeswoman said the company had already outperformed the S&P 500 in every full year it was in the index.
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