The U.S. Securities and Exchange Commission issued a rule in 2015 that required public companies to disclose the ratio of CEO pay to the median compensation of their employees. The rule went into effect in 2017. The figures showed that some chief executives were paid at a stunning multiple of the people who worked at their corporations. In 2019, seven CEOs made 1,000 times more than the median pay.
The 1,000-plus pay club is made up of the following:
|Kevin Clark||Aptiv||$15.2 million||2,077 times|
|Kevin Johnson||Starbucks||$19.2 million||1,675 times|
|James Quincey||Coca-Cola||$18.7 million||1,657 times|
|Steve Milligan||Western Digital||$12.9 million||1,279 times|
|André Calantzopoulos||Philip Morris International||$22.1 million||1,156 times|
|Dave Mosley||Seagate Technology||$10.3 million||1,081 times|
|Miguel Patricio||Kraft Heinz||$44.2 million||1,034 times|
CEO compensation usually is made up of base salary, bonus and stock options.
Whether CEOs make too much money has been argued for years. Many shareholders have tried to set new rules so that they can vote on the compensation of management in companies in which they own shares. This would be done when people cast their ballots for directors and other issues that management and these directors put on annual ballots. The results of these are put into proxy statements (DEF 14A). These documents often contain pages of formulas to defend CEO compensation.
Often, pay does not appear to be directly linked to stock performance or corporation financial results. As an example, Kraft Heinz stock dropped 27% in the 2019 calendar year. To be fair, shares of many of the other companies on this list rose more than the S&P 500 last year. It still begs the question of whether a CEO should make so much more than the median worker compensation.
For 2020, most stocks are likely to perform poorly, and many very poorly, due to the COVID-19 pandemic. Boards will be forced to consider new metrics. Some may peg stock performance directly to the outperformance of the S&P 500. However, they may decide that the business environment is so catastrophic that they will pay anything.