As the average Americans faced job losses during the pandemic that the began last year, CEOs enjoyed huge raises.
“The median pay for chief executive officers at 322 publicly traded U.S. companies grew to a record $13.2 million in 2020, up from $12.8 million the previous year, according to the Wall Street Journal. An analysis of corporate reports revealed how 206 CEOs saw a pay increase, with a median raise of nearly 15 percent.
Did you get a 15 percent pay raise last year? More than 20 million people lost their jobs during the 2020 pandemic, many of them laid off by the same CEOs who got raises. Some CEOs gave up part of their salary during the pandemic, but they made up for it in stock options. So much for sharing the pain.
Neither do they deserve those fat checks, according to another financial analysis.
Executive pay is set by a company’s board of directors, which the CEO often chairs. Boards are made up mostly of other CEOs, former CEOs, or wanna-be CEOs. They like to argue that colossal compensation packages are necessary to recruit the best talent.
To check if higher executive pay really does boost corporate results, the analysts at MCSI, a financial data firm, looked at the compensation packages of 235 CEOs between 2006 and 2020. The study looked at both the executive’s compensation when they were recruited, which MCSI calls “awarded pay,” and then compared it to “realized pay,” which is the amount they got at the end of their tenure.
Turns out, the CEOs who received the lowest awarded pay upfront consistently delivered higher returns to shareholders when stock price, dividends and other factors are considered.
‘The CEOs who oversaw the best performance, as measured by average annual total shareholder return, received the lowest average annual awarded pay, while the CEOs who oversaw merely average performance were the best paid by the same measure,’ the study authors wrote.”
For the rest of the story, visit the Houston Chronicle here.