CEO Pay is again in the spotlight of the 2020 AGM Proxy Season. With the COVID-19 affecting many aspects, a lot of companies have proceeded to adjustments and changes of their compensation practices, as a response to the pandemic. How has the compensation scene, however, changed over the last year? Of course the proxy season has yet to be finished, hence the ranking of the companies and analysis will change over time, but it is worth reviewing the changes over year, as well the impact of any decisions made in the compensation practices of a company.
We also take a look at how the performance of these companies
has increased to understand how executives are rewarded for
performance.
Key CEO pay takeaways so far:
- The top 50 total granted compensation has yet decreased by 54% from 2019 to 2018 ($4.73bn down to $2.15bn).
- Last year's top paid individual and company is yet to publish their filing, and everyone is waiting to see this year's changes. Last year, Elon Musk's pay accounted for over 50% of the $4.73bn granted of the 50 highest paid executives.
- This year's first place for highest paid CEO, belongs to Pichai, Sundar of Alphabet, whose payment represents almost 13% of the $2.15bn.
- Three companies that have made it to
the top 50 paid CEOs, have also made changes due to COVID-19,
either on their compensation practices or dividends.
- The Walt Disney Company: The Walt Disney Company (DIS) announced that in response to the business challenges relating to COVID-19, each of the Company's named executive officers agreed to receive a temporary reduction in the base salaries, effective with the payroll period commencing April 5, 2020. The Executive Chairman, and former Chief Executive Officer, of Walt Disney actually agreed to forego all of his compensation but a portion of his base salary.
- Burlington Stores, Inc.: Burlington's CEO, Michael O'Sullivan, will not take a salary, while the company's Board of Directors will forfeit their cash compensation, and the Company's executive leadership team has voluntarily agreed to decrease their salary by 50%.
- HCA Healthcare, Inc.: HCA Healthcare, Inc. announced that it has suspended its quarterly dividend program as a precautionary step to enhance its financial flexibility in response to the impact and uncertainty caused by the COVID-19 pandemic.
- The average growth in market capitalization in 2019, of the 50 highest paid executives was around 38%, a big increased compared to the growth of around 1% of 2018.
- 1 year Total Shareholder Return (TSR) growth also saw an increase of as much as 33%!
Footnotes
1 Compensation in USD – exchange rates based on single point of time, end of tax year 2018.
2 Excludes executives appointed since 2017 season.
Originally published 10 June, 2020
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