NEW YORK — Chief executives at the biggest public companies got an 8.5 percent raise last year, bringing the median pay package for CEOs to $11.7 million. Across the S&P 500, compensation for CEOs is often hundreds of times higher than typical workers.
The pay increase matches the bump that CEOs received in 2016, according to salary, stock and other compensation data analyzed by Equilar for The Associated Press.
For the first time, the government required companies to show in their annual proxy statements just how much more bosses make than the typical employee. The typical CEO made 164 times the median pay of their employees, according to Equilar’s analysis.
Because the government gave companies wide leeway in how they calculated the median pay of their workers, and because some industries rely heavily on part-time workers, the CEO-to-worker pay ratios are imperfect and make comparisons difficult. Despite pushback, Congress forced companies to publish the data as a way to shine a spotlight on income inequality.
A debate has already ensued about the significance of this newly released data.
“High pay ratios send a dispiriting message to the workforce,” said Liz Shuler, secretary-treasurer of the AFL-CIO, which has been calculating its own tally of CEO-to-worker pay ratios for years. “Companies are asking their workers to do more with less, at the same time that CEO pay is on the rise.”
Detractors among business groups, academics and compensation consultants say the ratio can give a false impression. For example, some companies exclude some of their lower-paid foreign workers, which regulations allow. And companies with large part-time workforces will show much greater disparity between the CEO’s pay and median pay.
The AP’s CEO compensation study includes pay data for 339 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their respective companies, which filed proxy statements between Jan. 1 and April 30. Some companies with highly paid CEOs did not fit these criteria, such as Oracle, and were excluded.
The top five
The highest-paid CEO in Equilar’s analysis was Hock Tan of Broadcom, who made $103.2 million. The vast majority of Tan’s compensation came in the form of a stock grant, valued at $98.3 million. He’ll receive the shares if the stock hits certain performance targets over the next four years. The company said in a filing with regulators that the figure looks substantial, but the amount Tan earns will “only be exceptional if our (stock returns relative to other companies) is exceptional.”
The second-highest paid CEO was Leslie Moonves of CBS. He made $68.4 million, including a $20 million bonus. CBS stock fell in 2017, but the company’s board highlighted how CBS is producing more premium content where it has an ownership stake, among other accomplishments.
No. 3 was W. Nicholas Howley at TransDigm, which designs and produces aircraft components. He earned $61 million, including $51.2 million of payments from the company on stock options he holds, as if they had earned dividends. Howley, a Transdigm co-founder, left his position as CEO last month. He is now executive chairman.
Jeffrey Bewkes of Time Warner was the fourth-highest paid CEO at $49 million. Time Warner rejiggered its compensation formulas for executives following its deal to be acquired by AT&T, which was announced in 2016 but is still awaiting government approval. Bewkes received restricted stock valued at $32 million.
No. 5 was TripAdvisor’s Stephen Kaufer, at $43.2 million. He received grants of options and restricted stock valued at $42.1 million, and the company said it does not expect to give him another stock grant as long-term incentive compensation until 2021.
