CEOs Salaries .. Strong growth and generous bonuses

The huge bonuses paid by CEOs have become a controversial topic in recent years, as CEOs of major American companies earn millions more than their employees earn, and more than 80% of their salaries are usually tied to stocks

Wider Gap:

The study noted that the rise in executive salaries widened the pay gap compared to other employees. In the same direction, the American Federation of Labor (AFL-CIO), which represents the largest federation of trade unions in the United States, said in a report in July of last year that the average salary paid by chief executives of the Standard & Poor’s 500 index, which is a stock index It includes shares of the 500 largest American financial companies, equivalent to 324 times what the average worker earns in their companies.‎

High inflation:

The report pointed out that in 2021, corporate CEOs were quick to blame workers’ wages for causing the rise in inflation at a time when real wages for workers actually fell by 2.4% in 2021 after adjusting for inflation. Workers faced lower wages with each price increase while US companies enjoyed record profits and CEO salaries increased at a faster rate, according to the report.

CEOs of S&P 500 companies received, on average, $18.3 million in total compensation. While the average CEO salary increased by 18.2%, faster than the inflation rate in the United States of 7.1%.

In the same context, organizational data provided by Alphabet, the parent company of Google, revealed that Sundar Pichai, CEO of Google, had earned approximately $ 226 million in 2022, and the majority of wages came from stock holdings, which are valued at more than From $218 million. The remainder of the compensation came from $2 million considered base salary and more than $5 million related to private security details. This financial package represents a major boost for Pichai, who made just over $6 million in 2021 and $7.4 million in 2020.

Pichai stock boosts come every three years, and in 2019 he received a similar package worth $281 million. Meanwhile, Alphabet stock is down 39% in 2022 amid a broader technology and market slowdown. Stocks have rebounded this year and are up about 19.5% since January. Other senior executives also received good salaries in 2022, although not close to Pichai’s.

Downsizing:

In January, Alphabet announced that it would cut 12,000 jobs, or 6% of its total workforce. According to the regulatory filing, the average wage for an Alphabet employee is just under $280,000. This means that Pichai’s salary is 800 times greater than him. Anyone making the $15.50 minimum wage in Alphabet’s home state of California would have to work 14.6 million hours, or just over 7,000 years (with a 40-hour work week and no vacation) to make up for Pichai’s salary for a year. 2022.

Contributors’ criticism:

Corporate boards have cut the salaries of some top executives in a new direction. Pay cuts have affected some of America’s best-known and most profitable presidents, including Apple CEO Tim Cook, Morgan Stanley CEO James Gorman, and Goldman Sachs CEO David Solomon.

The moves come on the heels of a terrible year in the stock market — 2022 was the worst year for the S&P 500 since 2008 — and come as a growing number of companies are laying off ordinary workers to prepare for a potential recession.

For his part, Tim Cook, CEO of Apple, reduced his salary for the year 2023 by 40%, after he raised criticism from shareholders for acquiring $ 100 million in 2022 and 2021.

Shareholders voted against Cook’s salary package after Apple stock fell nearly 27% last year. The vote is non-binding, but the Board’s Compensation Committee said Cook requested the cut

CEOs, according to Investopedia, often receive base salaries in excess of $1 million. In other words, the CEO is greatly rewarded when the company does well. However, the CEO is also not disadvantaged when the company is performing poorly but the reward may not be at the same level. Great base salaries on their own can provide an incentive for executives to work harder and make smart decisions.