Despite the worst year for the U.S. stock market since the Great Recession, chief executives of companies listed on the S&P 500 index did quite well, with the typical CEO earning $18.8 million in 2022, up 21% from the previous year.
Company boards awarded large grants of stock to incentivise their CEOs to navigate their companies through challenges such as high inflation, supply chain issues, and rising wages. However, a report from the investor advocacy group As You Sow listed 100 “overpaid” CEOs who received high compensation despite mixed company shareholder returns.
The report identifies Warner Bros. Discovery’s David Zaslav, Estée Lauder’s Fabrizio Freda, and Penn National Gaming’s Jay Snowden as the top three overpaid CEOs, receiving $246 million, $66 million, and $65.9 million, respectively, in 2022, despite their companies’ falling stock prices.
The group has released a report that lists the top 100 “overpaid” CEOs who received high compensation in 2022, despite mixed shareholder returns for their respective companies.
The ranking is based on three factors: CEO pay compared to shareholder returns for the year, the percentage of shareholders voting against CEO pay packages, and the ratio of the CEO’s pay compared to median worker compensation at the company.
Top 10 Overpaid CEOs of 2022
- David Zaslav from Warner Bros. Discovery, who received $246 million
- Fabrizio Freda from Estée Lauder who earned $66 million
- Jay Snowden from Penn National Gaming, $65.9 million
- Patrick Gelsinger from Intel, who was paid $178.6 million
- Glenn Fogel from Booking Holdings, who received $54 million
- William McDermott from ServiceNow, who earned $165.8 million
- Robert Goldstein from Las Vegas Sands, who received $31.2 million
- James Dimon from JPMorgan Chase & Co., who was paid $84.4 million
- Andy Jassy from Amazon, who earned $212.7 million
- Tim Cook from Apple, who received $98.7 million
Some CEOs received high compensation for successfully overseeing mergers and other significant company moves, such as Zaslav, who oversaw the creation of Warner Bros. Discovery in April 2022.
However, more investors and shareholders oppose CEO compensation, with approximately 24 major U.S. companies rejecting executive pay packages in nonbinding shareholder votes over the past year. This trend is highlighted in the report by As You Sow, a nonprofit organisation focused on promoting environmental and social corporate responsibility.
Investors and employees may increasingly call for top executives to share in the pain during downturns. The report was co-authored by Rosanna Landis Weaver, who analyses executive compensation shareholder proposals.
The recent economic slowdown and poor stock market performance have resulted in a spate of layoffs towards the end of 2022 and the beginning of 2023, with major companies such as Google, Amazon, and Warner Bros. Discovery letting go of thousands of employees.
In the past month, several corporate boards have announced pay cuts for high-profile CEOs, including Sundar Pichai of Alphabet, Tim Cook of Apple, and Jamie Dimon of JPMorgan, to name a few. The pay cuts range from $300,000 to $34 million.
These board votes reflect a growing trend of declining support for executive pay packages. According to ISS Corporate Solutions, as of May 2022, median investor support for these packages had hit its lowest level since 2011, when shareholder votes on executive pay became mandatory due to the Dodd-Frank Act.
The report found that 21 S&P 500 companies failed to secure majority support for their executive pay packages in 2022, up from 16 in 2021, ten in 2020, and seven in 2019.
Moreover, the pay gap between CEOs and their workers has widened in recent years. On average, S&P 500 CEOs earned 324 times more than their median-paid employees in 2021, according to the report. This growing scrutiny of compensation practices is part of a broader economic and political trend.
Most discussed CEOs of 2022
According to a report, Amazon CEO Andy Jassy earned a total of $212.7 million in compensation in 2021, while the median worker earned $32,855. The pay gap between CEOs and workers has been a growing concern for both the public and investors. Workers are organising unions and quitting their jobs to find better-paying opportunities.
While investors used to accept that CEOs should be paid based on their performance, they are now questioning the pay gap, especially when the company’s stock price is declining. The growing disconnect between pay and performance over a few years is making shareholders increasingly dissatisfied.
According to a recent report by As You Sow, a non-profit organisation that promotes environmental and social corporate responsibility, Robert Goldstein, CEO of Las Vegas Sands, received a total compensation of $31.2 million in 2022.
The organisation’s ranking is based on three factors: CEO pay against shareholder returns for the year, the percentage of shareholders voting against CEO pay packages, and the ratio of the CEO’s pay compared to median worker compensation at the company.
The report comes as shareholders and investors increasingly question CEO compensation, with growing scrutiny of compensation practices and the pay gap between chief executives and their workers.
William McDermott, the CEO of ServiceNow, was paid a total compensation of $165.8 million in 2022. This places him sixth on the As You Sow ranking of CEO pay, which calculates CEO pay against shareholder returns, the percentage of shareholders voting against CEO pay packages, and the ratio of the CEO’s pay compared to median worker compensation at the company.
The ranking is part of an increasing trend of shareholders and investors baulking at CEO compensation, with more investors rejecting executive pay packages in nonbinding shareholder votes over the past year.
According to the As You Sow ranking, Jay Snowden, the CEO of Penn National Gaming, was paid $65.9 million in total compensation in 2022. The ranking considers three factors, including CEO pay compared to shareholder returns, the percentage of shareholders voting against CEO pay packages, and the ratio of CEO pay to median worker compensation at the company.
This concludes that Snowden’s report on high compensation is noteworthy, as the growing pay gap between executives and their workers has drawn increasing criticism and scrutiny from investors and the public alike.