NEW YORK – Even when regular employees earn their biggest increases in decades, they seem tiny compared to what CEOs receive.
The typical compensation package for executives who run S&P 500 companies soared 17.1% last year, to an average of $ 14.5 million, according to data analyzed for The Associated Press by Equilar.
Earnings on the 4.4% increase in wages and profits offset by private sector workers until 2021, which was the fastest since 2001. The increases in many grassroots workers could not be maintained either. kept up with inflation, which reached 7% at the end of last year.
CEO pay skyrocketed as stock prices and profits plummeted as the economy emerged from its brief recession in 2020. As much of a CEO’s compensation is tied to that. performance, their pay packages skyrocketed after years of moderately moderate growth.
In many of the most amazing packages, such as the $ 296.2 million Expedia Group and the $ 84.4 million JPMorgan Chase, the boards of directors gave particularly large stock grants or stock options. to newly appointed CEOs who were navigating their businesses through the pandemic or to established leaders than themselves. he wanted to convince her to stay.
CEOs are often unable to take advantage of these actions or options for years, or possibly never, unless the company meets performance targets. But companies have yet to reveal how much they are worth. Only about a quarter of the typical salary package of all S&P 500 CEOs last year came in real cash that could be pocketed.
Whatever its composition, the pay gap between CEOs and supervising grassroots workers continues to widen. In half of the companies in this year’s salary survey, the worker in half of the company’s salary scale would need at least 186 years to achieve what his CEO did last year. That’s more than 166 a year earlier.
At Walmart, for example, the company said its average partner earned $ 25,335 in compensation last year. This means that half of its workers earned more and half less.
This is a 21% increase from $ 20,942 the previous year and occurred when the average hourly wage of the company for US partners rose from $ 14.50 in January 2021 to more than 17 dollars currently. This increase was greater than the percentage obtained by CEO Doug McMillon. But its 13.7% increase was a total package valued at $ 25.7 million.
Anger grows over this imbalance. Polls suggest that Americans from all political parties see CEO pay as too high, and some investors are backing down.
Workers are trying to organize unions across the country, and the “Great Resignation” has encouraged millions to give up to find better jobs elsewhere. The U.S. government counted more than 4 million casualties in April 2021 alone, the first time this has happened. Since then, the monthly figure has exceeded 4.5 million twice.
“This will add a huge cost to business results, having these kind of turnover rates,” said Sarah Anderson, director of the global economics project at the Progressive Institute for Policy Studies.
“They should be thinking about what kind of message they’re sending these people, about whether they’re really valued in their work,” Anderson said. “When the guy in the corner office does several hundred, if not thousands of times. Plus, that’s sending a really demoralizing message.”
Earnings for CEO remuneration had slowed in recent years, with the average increase from 8.5% in 2017 to 4.1% in 2019. It returned to 5% in 2020, which it was a difficult year because the pandemic closed the economy and the profits of many companies fell.
By 2020, many companies were reformulating the complex formulas they created to determine the salary of their CEOs. The tweaks offset the losses caused by the pandemic, which many councilors said was an extraordinary event beyond the CEO’s control.
Then came 2021. Thanks to a reopened economy, very low Federal Reserve interest rates and other factors, stock prices skyrocketed and the S&P 500 rose nearly 27%, setting records for the entire ‘year. Earnings per share soared by about 50%.
Throughout the year, CEOs had to navigate stuck supply chains and the shortage of chips and other key materials that affected businesses in all industries, said Dan Laddin, a partner at Compensation Advisory Partners. a consulting firm that works with boards.
“All of this sparked a desire to really reward executives,” said Kelly Malafis, also a partner at Compensation Advisory Partners, “because the financial performance was there, and the vision was that management teams were exceptional at navigating the situation and get results. ”
According to data analyzed by Equilar, the average jump of 17.1% last year for S&P 500 CEOs was the largest since the 23.9% increase in compensation packages in 2010.
Think of Marry Barra, CEO of General Motors. Its industry was particularly affected by the shortage of computer chips, which led to a thick increase in car production.
Still, GM’s board highlighted how the company still made record gains before interest, taxes and some other items. The carmaker also accelerated the development of its electric vehicles. These are two of the factors influencing Barra’s salary, and his compensation increased by 25.4% to $ 29.1 million.
“I hope the record-breaking corporation recognizes that the workers who do the work are the ones who generate the revenue,” said Dave Green, a hot metal driver at a GM facility in Bedford, Indiana. “We’re just trying to get out.”
He mentioned in particular the temporary workers who earn about $ 16 per hour, who have to work years before moving to full-time work and meanwhile do not have many opportunities for days off.
“The new people who come, their children will not be able to have the opportunities that my children had,” said Green, who has two daughters and started GM as a summer assistant in 1989.
JPMorgan Chase’s Jamie Dimon came closest to the top of the CEO’s payroll last year, with his $ 84.4 million compensation package the fifth highest in the survey. ‘AP. That was up 166.7% from a year earlier, with most coming from a $ 52.6 million share option grant.
The council said it offered options for its wish that Dimon, 66, would continue to lead the company for many more years and a “single turning point in Mr Dimon’s tenure”. He also said that the options were not part of his usual annual compensation and that he had to wait at least five years to start exercising them.
Still, only 31% of investors at JPMorgan Chase’s annual shareholders’ meeting recently gave a thumbs up to Dimon’s salary package. The vote is only advisory, however, and does not oblige the company to make changes.
Last year, an average of 92.6% of shareholders approved what is called their “Say On Pay” vote in the AP poll. This was down slightly from 93.4% the previous year.
The AP and Equilar clearing study included payroll data from 340 CEOs of S&P 500 companies who have served their companies for at least two fiscal years, who filed power statements between Jan. 1 and on April 30th. Some high-profile CEOs are not included because they do not meet the criteria, such as Andy Jassy of Amazon and Parag Agrawal of Twitter. The survey does not count changes in the value of CEOs’ pensions or other items in their compensation totals.
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AP business writers Matt Ott, Tom Krisher, Anne D’Innocenzio, Michael Liedtke and Ken Sweet contributed.