While these compensation totals are taken from company financial records, they are often estimates driven by companies’ attempts to assess what stock their CEOs might receive. As a result, executives may earn less than these totals, especially if the bear market persists and their companies’ stock prices remain depressed, but they could also earn much larger sums if stocks rally.
Many of the top executives in the survey received far greater compensation than the heads of much larger companies with much larger profits. For example, Tim Cook, Apple’s chief executive, received his first equity award since 2011 last year and received a total compensation of $99 million, placing him just 13th in the survey.
Despite the pay growth, shareholders, apparently believing it to be 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 issues.
For several years, public companies have had to compare their CEO’s compensation to that of a typical employee, the result of a regulation passed by Congress that was intended to help investors assess the level of executive compensation. Last year, CEOs earned 339 times more than the median employee salary at their companies, up from 311 times in 2020, according to Equilar. The median employee salary rose 10% last year, from $83,808 to $92,349.
Executive pay last year jumped in part because boards of directors, which decide CEO compensation, wanted to reward top executives for guiding their companies through the pandemic.
Additionally, the stock market rallied in 2021 and the value of stock awards, which typically make up the largest portion of executive compensation, was also higher. When stock prices rise, boards tend to say that executives are doing a good job and pay them more.