How much is a CEO worth? The COVID-19 pandemic created enormous losses for many companies so it might seem logical some CEO pay packages would decline along with companies’ profits. In fact, a number of CEOs announced high-profile salary cuts last year, reported Axios.
The stinger is salary is often a small part of CEO compensation. While executive compensation packages vary from company to company, they often include:
- Base salary
- Short-term incentives such as bonuses
- Long-term incentives such stock options
- Benefits such as health and life insurance, retirement plans, and paid vacations
- Perquisites (perks), such as financial counseling, tax preparation, security, cars and drivers, corporate aircraft, and country club fees
When all aspects of CEO pay are considered, the majority of CEOs received higher pay in 2020.
“Fortunately for those CEOs, many had boards of directors willing to see the pandemic as an extraordinary event beyond [CEOs’] control. Across the country, boards made changes to the intricate formulas that determine their CEOs’ pay – and other moves – which helped make up for losses created by the crisis,” reported Stan Choe of the AP.
As a result, median pay for CEOs at companies in the Standard & Poor’s 500 Index was $12.7 million, according to data analyzed by Equilar for the AP. That’s a 5 percent pay increase over 2019 levels. In contrast, wages and benefits for non-government workers who were employed went up by 2.6 percent in 2020.
“Companies have to show how much more their CEO makes than their typical worker, and the median in this year’s survey was 172 times. That’s up from 167 times for those same CEOs last year, and it means employees must work lifetimes to make what their CEO does in just a year,” reported AP.
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