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Because of the beautiful words, the CEOs don’t share the pain

Because of the beautiful words, the CEOs don’t share the pain


We are all together, the heads of corporations told us last year that they would leave parts of their salaries or allowances as they promised to recognize the devastation caused by Covid-19.

At the end of last June, 502 U.S. companies were listed 17 percent Russell 3000 announced “adjustments” to the salaries of their CEOs. They were probably traders, travel groups, and manufacturers trumpet the will of their leaders to share the pain.

It’s part of a larger change in corporate culture. U.S. leaders have been seen talking about important issues voting rights and racial difference ra climate change. Last year, almost 19% of large public companies around the world included some environmental or social goals in their executive salary plan, a double share in 2017, says ISS ESG, the proxy consultant’s data weapons.

While some adherents of “interested capitalism” may be true believers, others use the doctrine marketing tricks and a way to avoid investor pressure to get results.

Last year’s pandemic led to personal pay cuts that allowed business leaders to put their money where their mouths were. But, being executive executives, the bottom line of the CEO’s remuneration is different than the first suggested titles.

According to the ISS ESG, instead of a reduction last year, the salary package of Russell 3000 CEOs rose by 6 percent. In the largest businesses, including the average salary, bonuses and long-term shares of the top S&P 500 CEOs, it grossed $ 13.3 million in 2020, marking the 11th straight increase for the year. Senior management used corporate aircraft more widely for personal travel, reporting to corporations.

In contrast, the median employee salary in S&P 500 companies fell 17 percent last year, so the ratio of CEO salaries to employee salaries rose from 182 to 227.

It was largely a U.S. phenomenon. Most European and UK leaders took Covid’s pay cuts along with their employees: the median salary package for the main Stoxx 600 and FTSE 100 fell 18 percent to about $ 3 million.

U.S. wage plans have always depended on stocks, and stocks have been in tears, thanks to the support of central banks and the rapid spread of vaccines. The S&P became firmly at the pre-pandemic level in November and has since garnered a number of new developments the highest. The Euro Stoxx and FTSE 100 he finally recovered from Covid’s losses last week.

But that’s not the whole story. Some companies have been playing with pay rules quickly and lightly when they lost their goals to reward top executives. The Chipotle fast food group, for example, has ruled out a three-month lockout (March, April and May) from key metrics and some Covid-related expenses, the ISS says the changes have pushed CEO Brian Niccol’s total pay to $ 23.6. m-ra $ 38 million.

Others have gone from absolute goals to equal performance with peers so that this measure can still be paid for in years when there may be losses. “It’s a challenge for compensation committees,” says Courtney Yu, research director at Equilar’s ​​salary data group. “How do you get executives to see this thing and get your business out?”

Investors, quite well, are taking some rather obscure changes. Most executive payment plans still run at annual general meetings Intuit it, which win praise for limiting payments and resetting targets. Increasing numbers are facing stiff opposition to size, vague goals, or a free pass to management.

To date, 86 large U.S. companies have made AGMs, and nearly 9 percent of pay plans have failed or received less than 60 percent support, up from 5 percent last year, Equilar says. Investors voted on salary plans Walgreens Boots Alliance, he saidunjust and senseless punishment ” Covide executive team, and Starbucks, the issue was a $ 50 million retention bonus for Chief Kevin Johnson.

Rebellions are also emerging in companies like this General Electric, AT&T and Wells Fargo. Johnson & Johnson shareholders will vote on Thursday to award Alex Gorsky With $ 29.6 million To achieve “strategic performance,” even pharmacists have lost most of their financial goals and billions of asbestos and talcum powder asbestos claims.

UK is not immune: National Express, Glencore and AstraZeneca will soon be voting on Glass Lewis advisory representatives who consider the payment plans excessive or Covid disconnected from reality.

CEOs can talk about corporate responsibility until the cows get home. Until companies and shareholders “Suspend the heads I earn, I still earn” pay plans, we shouldn’t believe them.

brooke.masters@ft.com

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