Average CEO pay soars; will the climb slow now with coronavirus pandemic?

The Associated PressMay 28, 2020

The typical pay package for CEOs at the biggest U.S. companies topped $12.3 million last year, and the gap between the boss and their workforces widened further, according to AP’s annual survey of executive compensation.

Median pay for CEOs in the survey climbed 4.1% last year. For typical workers at their companies, it rose 3.2%. It would take two lifetimes — 169 years — for the typical employee at most S&P 500 companies to make what their CEO did last year, according to data analyzed by Equilar for AP.

For the first time since the AP’s annual pay survey began in 2011, a woman is at the top of the list: Lisa Su of Advanced Micro Devices. She had compensation valued at $58.5 million after guiding her company’s stock to the best performance in the S&P 500 for two straight years.

Otherwise, the top of the pay rankings again includes several familiar names from the media and entertainment industries, such as Walt Disney’s Robert Iger and Netflix’s Reed Hastings.

CEOs such as Alphabet’s Sundar Pichai and Intel’s Robert Swan had packages that were valued even higher than Su’s but were excluded because the AP’s survey looks only at S&P 500 bosses who have been in the job for at least two years, in part to avoid distortions caused by sign-on bonuses.

AP calculated the highest-paid CEO in each state. Union Pacific’s Lance Fritz had that standing in Nebraska with pay of $12 million. Iowa’s highest-paid CEO was Daniel Houston of Des Moines-based Principal Financial Group with pay of $11.5 million.

Of course, the survey’s results are from before the coronavirus pandemic upended everything. Now, there’s a chance the outbreak will do what rising anger about income inequality has not in recent years: pull executive compensation lower.

Hundreds of CEOs across the country have already said they’ll forgo some or all of their salary. And the turmoil in the stock market and the global economy could make it tougher for CEOs to meet performance targets and threaten the stock awards and bonuses that make up the majority of their pay.

Consultants and investors say boards of directors are considering making changes to compensation plans to help shield CEOs from the damage caused by a recession that no one saw coming.

The AP’s compensation study included pay data for 329 CEOs at S&P 500 companies. To calculate CEO pay, Equilar adds salary, bonus, stock awards, stock option awards, deferred compensation and other components that include benefits and perks.

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