By STAN CHOE
NEW YORK (AP) – Even when regular workers earn their biggest increases in decades, they look tiny compared to what CEOs are getting.
The typical compensation package for chief executives running S&P 500 companies shot up 17.1% last year, to an average of $ 14.5 million, according to data analyzed for The Associated Press by Equilar.
Earnings exceed the 4.4% increase in wages and profits offset by private sector workers by 2021, which was the fastest since 2001. The increases in many grassroots workers also failed to keep up with inflation, which reached 7% at the end of last year.
The CEO’s salary took off as stock prices and profits soared sharply as the economy emerged from its brief recession in 2020. Because much of a CEO’s compensation is tied to that performance, his salary packages have grown after years of moderate growth mostly.
In many of the most astonishing packages, such as the $ 296.2 million Expedia Group and the $ 84.4 million JPMorgan Chase, boards of directors have granted particularly important stock options or shares to newly appointed CEOs. who were navigating their businesses through the pandemic or the established leaders. he wanted to convince her to pass.
CEOs often can’t take advantage of such actions or options for years, or possibly never, unless the company meets performance targets. But companies have yet to reveal estimates of how much they are worth. Only about a quarter of the typical salary package for all S&P 500 executives last year came as real money they could pocket.
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 who is in the middle of the company’s pay scale would take at least 186 years to do what his CEO did last year. It is 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 did more and half less.
That’s 21% more than the previous year’s $ 20,942 and occurred when the company’s average hourly wage for U.S. partners rose from $ 14.50 in January 2021 to more than $ 17 today. That increase was greater than the percentage obtained by CEO Doug McMillon. But its 13.7% increase gave it a total package valued at $ 25.7 million.
Anger grows over such an imbalance. Polls suggest that political party Americans see CEO salaries as too high and some investors are falling behind.
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 during April 2021 alone, the first time this has happened. Since then, the monthly number has exceeded 4.5 million twice.
“This is going to add a huge cost to business results, have this kind of turnover rates,” said Sarah Anderson, director of the global economics project at the Progressive Institute for Policy Studies.
“They should think about what kind of message they are sending to those people, about whether they are really valued in their work,” Anderson said. “When the guy in the corner office is earning several hundred, if not thousands of times more, that’s sending a really demoralizing message.”
Earnings for CEOs have been slowing in recent years, with the average rise from 8.5% in 2017 to 4.1% in 2019. It returned to 5% in 2020, which was a difficult year because the pandemic closed. economy and profits in many closed companies.
By 2020, many companies have reformulated the complex formulas they have created to determine the salary of their CEOs. The adjustments offset the losses caused by the pandemic, something many boards said was an extraordinary event beyond the CEO’s control.
Then came 2021. Thanks to a reopened economy, super-low Federal Reserve interest rates and other factors, stock prices skyrocketed and the S&P 500 jumped nearly 27%, setting year-round records. Earnings per share soared by about 50%.
Throughout the year, CEOs have had to navigate complicated supply chains and shortages of chips and other key materials that have affected companies in all industries, said Dan Laddin, a partner at Compensation Advisory Partners, a consulting firm that works with tips.
“All of this has led to a desire to really reward executives,” said Kelly Malafis, also a partner at Compensation Advisory Partners, “because the financial performance was there and the view was that management teams were exceptional at navigating the situation and getting results.”
According to data analyzed by Equilar, the 17.1% increase in the average salary of S&P 500 CEOs last year was the largest since the 23.9% increase in 2010 compensation packages.
Consider Mary Barra, CEO of General Motors. Its sector has been particularly affected by the shortage of computer chips, which has led to the production of cars.
Still, GM’s board highlighted how the company still made record gains before interest, taxes and a few other items. The carmaker has also accelerated the development of its electric vehicles. Those are two of the factors influencing Barra’s salary, and his compensation has increased by 25.4% to $ 29.1 million.
“I hope the record-breaking profit 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 survive.”
He cited in particular temporary workers who earn about $ 16 an hour, who have to work years before entering as full-time employees and do not have many opportunities for days off in the meantime.
“New people coming in, their kids won’t be able to have the opportunities my kids have had,” said Green, who has two daughters and started at GM as a summer assistant in 1989.
Closer to the top spot for the CEO’s salary last year was JPMorgan Chase’s Jamie Dimon, whose $ 84.4 million compensation package was the fifth highest in the AP poll. That was 166.7% more than a year earlier, and most came from a $ 52.6 million share option grant.
The council said it was offering options because of its desire for Dimon, 66, to 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 regular 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. However, the vote is only advisory 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 is down just a little from 93.4% the previous year.
The AP and Equilar clearing study included salary data from 340 CEOs of S&P 500 companies who served at least two fiscal years in their companies, who filed representational statements between Jan. 1 and April 30. Some high-profile CEOs are not included because they do not fit the criteria, such as Andy Jassy of Amazon and Parag Agrawal of Twitter. The survey does not count changes in the value of CEO pensions and some other items in their totals for compensation.
AP Business writers Matt Ott, Tom Krisher, Anne D’Innocenzio, Michael Liedtke and Ken Sweet contributed.
This story was first published on May 26, 2022. It was updated on May 27, 2022 to correct the spelling of the first name of Mary Barra, CEO of General Motors.
CEO pay rose 17% in 2021 as profits soared; workers trailed – Press Telegram Source link CEO pay rose 17% in 2021 as profits soared; workers trailed – Press Telegram