When considering CEO salaries, Broadcom’s Hock Tan topped the list last year with a compensation package valued at $161.74 million, as reported by the Wall Street Journal, making him the highest-paid among CEOs of S&P 500 companies. This substantial compensation comes into perspective with Broadcom’s stock performance, which doubled over the past year.
However, an examination of companies with declining stock values reveals that high executive pay persists in some instances. The study highlighted cases where even among the S&P’s worst performers, certain CEOs still received significant compensation packages. For example, Enphase Energy saw its return plummet by 50.1% last year, yet CEO Badrinarayanan Kothandaraman received $19.52 million, with $18.8 million in equity, aligning with the common trend of equity-heavy compensation in underperforming companies.
Similarly, Mark Douglas of FMC, which experienced a 48% drop, was compensated $9.63 million, the bulk of which was also in equity. On the healthcare front, CEOs of Pfizer and Moderna were among those with hefty pay packages amidst falling demand for COVID-related vaccines, which affected their financial performances. Moderna's CEO Stephane Bancel received a package totaling $17.07 million, with a notable decline in the value of his stock and options from $12.5 million to $7.3 million by year’s end.
Pfizer's Albert Bourla received $21.57 million, without bonuses, reflective of the company's financial results. Unique in this context was Chad Richison of Paycom Software, who, amidst a -33.1% shareholder return, secured over $3 million through cash and other payments without a heavy reliance on equity.
These instances underscore the ongoing scrutiny of executive compensation, particularly as the wage gap widens between CEOs and their employees. Notably, the Wall Street Journal found that most executives at S&P 500 companies had received raises of at least 9% over the year, with nearly a quarter seeing increases of 25% or more. In stark contrast, average employee salaries rose by 4.4%, marking the highest growth since 2001 as per The Conference Board.
The debate over fair CEO pay continues, highlighted by comparisons of executive compensation to that of average employees and examples of executives like Applovin’s Adam Foroughi, who earns less than the median company employee but holds a substantial share in stock. Occasionally, leaders may forgo a salary, such as Elon Musk, whose potential $56 billion pay package is contingent on specific performance benchmarks.