It’s been a blowout year for executive pay.
By Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni
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Paying (a lot) for performance
Six of the 10 largest executive pay packages of all time were awarded last year. This and other findings come from a new survey of the 200 highest paid C.E.O.s at public companies conducted for The Times by Equilar, a consulting firm. “Even in a gilded age for executive pay, 2020 was a blowout year,” writes The Times’s Peter Eavis.
The spike is due in large part to linking C.E.O.s’ pay to stock prices. This “pay-for-performance” structure is intended to align managers’ incentives with those of the company’s owners, the shareholders. But it also raises questions about how much credit executives deserve for rising stock prices, and whether the performance conditions attached to stock awards are suitably tough. C.E.O. pay jumped 14.1 percent last year, while the median worker got a 1.9 percent raise.
C.E.O.s in the survey received 274 times the pay of the median employee at their companies, up from 245 times in the previous year. Around two-thirds of companies with the largest pay packages had wider gaps between executive and employee pay after the pandemic.
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