How Elon Musk helped raise the roof on C.E.O. payment
The gap with workers widened further when public companies gave wealthy top executives pay packages inspired in part by Tesla. Elon Musk Tesla's rich goal-based compensation package for CEO has helped redefine executive pay. Credit...Aly SongReuters The rich goal-based compensation package for CEO Elon Musk Tesla has helped redefine executive pay.
When Tesla gave Elon Musk a multimillion-dollar pay package in 2018, the landmark deal helped vastly increase the potential compensation of CEOs at many of America's largest public companies. The package was made up entirely of a huge stock grant linked to company performance. Since Tesla has sold enough electric vehicles to become the most valuable automaker on the planet, Musk has so far received shares worth almost $60 billion, making him the richest person in the world.
Compensation experts say they see the influence of the Musks deal everywhere. There are plenty of companies that have looked at that award and its structure, said Brian Johnson, chief executive of ISS Corporate Solutions, which advises companies on executive compensation and other practices. They think it's a good way to incentivize performance. A new survey by Equilar, a compensation consulting firm for The New York Times, shows that many of the highest-paid executives in recent years received packages that, like Musks, could pay the kind of sums that would have been unthinkable a few years ago . . And even as the gap between what executives and workers earn continued to widen during the pandemic, companies opened the floodgates on what they paid their leaders in 2021.
The 100 million dollar club
The 10 highest-paid executives had compensation of more than $100 million at the start. His average compensation was $330 million, the highest in history. But it's not just a few executives at the top who enjoy the loot. Underscoring how widespread salary increases were last year, the average CEO earned $32.1 million in 2021, up 27 percent from $25.3 million in 2020 and far more than in pre-pandemic years.
Jeff Green, CEO of The Trade Desk, a digital advertising company, reported compensation of $835 million last year, making him the highest-paid executive in the Equilar survey, which encompasses 200 companies, all of which They have revenues of more than a billion dollars. Greens' pay in 2021 was the third-highest amount Equilar found in its last five annual surveys that are based on companies' pay disclosures. Musks' 2018 deal, which Tesla valued at $2.3 billion, remains the largest in those years
Zig Serafin, chief executive of Qualtrics, a software company, ranked second last year with $541 million in compensation. It was the fourth highest sum in the last five years. Peter Kern, CEO of Expedia, the travel company, came in third last year with a payout of $296 million. While those compensation totals are taken from the company's financial files, they are often estimates driven by the company's attempts to value the stock its CEOs might receive. As a result, executives may earn less than those totals, especially if the bear market persists and their companies' share prices remain low, but they could also take home much higher amounts if stocks recover.
Daily Trade Updates The latest coverage of the trade markets and the economy delivered via email every weekday. Many of the highest-ranking executives in the survey received pay packages that were much larger than those of heads of much larger companies with much higher earnings. For example, Apple CEO Tim Cook last year received his first stock award since 2011 and earned a total compensation of $99 million, placing him 13th in the survey.
Despite the increase in compensation, shareholders who apparently believe it is tied to performance have voted in favor of most of the packages. Just 3 percent of votes on compensation garnered less than 50 percent shareholder support in the year to June 3, according to
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