While those aggregates are taken from the company’s financials, they are often estimates determined by the companies’ attempts to value the stock their CEOs might receive. As a result, the executives may earn less than those amounts, especially if the bear market continues and their companies’ stock prices remain low, but they may also take home much higher amounts if stocks recover.
Many of the top executives in the study received pay packages that far exceeded those of the heads of much larger companies with much greater profits. For example, Apple CEO Tim Cook last year received his first share award since 2011 and received a total consideration of $99 million, placing him only 13th in the survey.
Despite the pay rise, shareholders, apparently assuming it’s performance-related, voted in favor of most packages. According to an analysis of 1,444 public companies by Willis Towers Watson, a consulting firm that advises companies on executive compensation programs and corporate governance matters.
For several years now, public companies have had to compare their CEO’s pay to that of a typical employee, the result of a regulation passed by Congress intended to help investors assess the level of executive pay. Last year, chief executives earned 339 times the average wage of employees at their companies, up from 311 times in 2020, according to Equilar. Median employee wages rose 10 percent last year, from $83,808 to $92,349.
Last year’s executive pay jumped in part because boards of directors, which determine CEO pay, wanted to reward top executives for navigating their companies through the pandemic.
In addition, the stock market rose in 2021 and the value of stock exchanges, which typically make up the bulk of CEO pay, was also higher. When stock prices rise, boards of directors tend to say that executives are doing a good job — and paying them more.
