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Irish Times
a day ago
- Business
- Irish Times
Median CEO pay at top US companies surges to $19m per year
Pay for S&P 500 chief executives rose by 7.7 per cent last year as packages at the US's biggest companies keep increasing. Median total pay for S&P bosses rose to $19 million (€16.3 million) last year. The jump in median chief executive pay was higher than a 7.2 per cent rise in 2023, according to Farient Advisors, a pay consultancy, and marked the quickest pace of growth since an 11.5 per cent gain in 2021. Total pay for the broader American workforce increased 3.6 per cent in the 12 months that ended December 2024, according to the US Bureau of Labor Statistics. 'We're still seeing executive pay increases above the inflationary rate as well as above typical rank-and-file employees,' said Eric Hoffmann, chief data officer at Farient Advisors. READ MORE The highest paid S&P 500 CEO last year was Rick Smith of Taser maker Axon Enterprise, who raked in $164.5 million mostly from stock awards after meeting targets over several years, according to data provided by MyLogIQ. Brian Niccol, chief executive of Starbucks, was second with $95.8 million in total last year, mostly from stock awards. His pay package included a $5 million sign-on bonus and two one-off stock awards that ranged from $75 million to $80 million to cover forfeited cash and unvested equity he accrued while running Chipotle. Axon did not respond to a request for comment and Starbucks declined to comment. In the UK, median pay for chief executives of the 100 most valuable London-listed companies rose 6.8 per cent to £4.58 million in 2024-25 year on year, according to the High Pay Centre's annual survey released on Sunday. This is the highest level on record, and the fourth successive year that bosses' pay has increased. The level of pay for S&P 500 executives has drawn scrutiny from groups that question whether it is exacerbating inequality. The American Federation of Labor and Congress of Industrial Organizations, a national trade union, flagged Niccol's pay package as an example of the widest pay gap between the top executive and median employee of one of the biggest US companies. Niccol's annual pay was more than 6,666 times greater than the total pay for the median employee, a part-time barista, who earns about $15,000 a year, according to company filings. 'We just see ever-growing income inequality in this country, and it's becoming harder and harder for workers to make ends meet,' said Carin Zelenko, director of capital strategies at AFL-CIO. Sarah Anderson, global economy project director for the non-profit research group Institute for Policy Studies, said the widening gap between chief executive and worker pay was bad for democracy. 'This gap between CEO and worker pay is a key driver of rising inequality and concentration of wealth at the top. We're seeing more and more signs of how ultra-wealthy people have too much influence over our political system,' she said. Still, the larger pay ratio between an employee and a chief executive may also reflect a company's business model. A retail boss is likely to have a wider pay ratio than a technology chief executive who usually hires engineers who are full-time workers. Nvidia, the most valuable US company, reported a chief executive to median employee pay ratio of 166 to 1, with its median employee earning $301,233 compared with CEO Jensen Huang's total pay of $49.9 million in 2024. Meanwhile, shareholder support for executive pay packages has remained strong. ISS-Corporate found that the median shareholder support for executive pay packages has remained between 92.4 per cent and 92.6 per cent for the past five years. Jun Frank, head of compensation and governance services at ISS-Corporate, said US economic uncertainty may affect executive pay trends in the future. Copyright The Financial Times Limited 2025
Reuters
14-07-2025
- Business
- Reuters
Under pressure, U.S. companies back off DEI pay metrics
July 9 (Reuters) - The opinions expressed here are those of the author, a columnist for Reuters. This column is part of the weekly Reuters Sustainable Finance newsletter, which you can sign up for here. Tying U.S. executives' pay to corporate diversity metrics was all the rage for a few years. But that's no longer the case as companies respond to pressure from conservative activists and U.S. President Donald Trump's administration, a new review found. Compensation consulting firm Farient Advisors found the share of S&P 500 companies who said they used diversity, equity and inclusion measures in their executive compensation plans fell to 22%, according to proxy statements filed this year. The figure was 52% last year and hit a peak of 57% in 2023. Brian Bueno, Farient's Sustainability Practice Leader, said the decline reflected the pressure companies have faced from conservative activists who say the practices encourage discrimination. He expects more companies will follow as executives worry about their exposure to government pressure if they are seen as embracing diversity measures. Many have an eye on Trump's executive orders like one encouraging the private sector to "end illegal DEI discrimination and preferences, opens new tab," Bueno said. Among corporate executives, Bueno said, "We know of cases where they decided the (pay) measure created too much legal risk and stopped using it." In other cases, companies may still consider diversity but measure it with different terms, he said. Leaders at those companies "found a way to modify their language to avoid it looking like a DEI measure," he said. Even when used, diversity incentives typically account for no more than a few percentage points of the total pay of S&P 500 CEOs. Their median pay reached a record $16.8 million in 2024. The metrics gained popularity as companies looked to respond to a national conversation about race in the U.S. after the murder of George Floyd, an unarmed Black man, at the hands of police in 2020. Cessna business jet maker Textron (TXT.N), opens new tab said in last year's proxy statement that "hiring diversity" metrics were used to set 5% of executives' annual incentive compensation. But Textron said it would shift to an ESG metric that, according to this year's proxy statement, tracked "progress related to safety, sustainability and an engaged, high-performance workforce." A Textron spokesperson declined to comment further. One company still using diversity targets for compensation this year was Verizon. (VZ.N), opens new tab It said in an April 7 filing that, "As a large, multinational company with a broad customer and employee base, we know that our operations are strengthened when we have diverse perspectives and experiences reflected in our workforce and business partners." But in May, Verizon said it would end the targets and other diversity efforts, as it sought a merger approval from the Federal Communications Commission. "Verizon recognizes that some DEI policies and practices could be associated with discrimination," said Verizon chief legal officer Vandana Venkatesh at the time. A Verizon representative declined further comment. Another company changing its compensation terms is Mastercard (MA.N), opens new tab, which said that starting this year, it would no longer use a modifier tied in part to gender pay parity. The change "reflects the significant progress that has been made since 2021 in the areas of greenhouse gas emissions, financial inclusion and gender pay parity," Mastercard said in an April filing. A representative declined further comment. Mastercard had faced a shareholder resolution calling for it to consider eliminating the pay goals, filed by the conservative activist group National Legal and Policy Center. It called Mastercard's initiative "discriminatory." Citing the change, Mastercard won regulatory permission, opens new tab to skip a vote on the item. Luke Perlot, an associate director for the Center, praised the shift and said next year his group will press companies on whether they actually drop DEI efforts. "We think some companies are just changing the name," he said.
