The WSJ has published its annual ranking of CEO pay and compensation packages for S&P 500 companies, and Apple’s Tim Cook only takes 171st place despite AAPL sitting at the top of the index by company worth.
Standard and Poor’s 500 (S&P 500) ranks US companies by market capitalization, putting AAPL in first place with its value of more than 2 trillion dollars …
Indeed, AAPL makes up almost 6% of the total value of the top 500 US companies, but this isn’t reflected in CEO Tim Cook’s salary and performance-related pay.
The WSJ reports that Cook’s total package for 2020 was worth $14,769,259, which is only a little higher than the median of $13.4M across the S&P 500. In a year in which the one-year return for shareholders was 109%, Cook’s compensation increased by a more modest 28%. (Shareholder returns are measured as the share price increase, plus dividends.)
The best-paid chief exec was Paycom Software founder and CEO Chad Richison. The WSJ notes that some of the top earners are from companies whose stock did well during the pandemic.
Paycom Software Inc. founder Chad Richison, whose pay package was valued at more than $200 million, was the highest-paid CEO in the Journal’s analysis. Seven CEOs were awarded compensation valued at more than $50 million last year, compared with two in 2019 and three in 2018.
Most of the companies led by this year’s top earners aren’t typically in the pay stratosphere. Several reflect the winners of the pandemic and its economic turmoil, including videogame maker Activision Blizzard Inc. and biotech giant Regeneron Pharmaceuticals Inc.
Most CEO compensation packages are predominantly restricted stock or stock options, as boards continue to emphasize pay structures intended to tie executive pay to the fortunes of shareholders generally. As a result, as stock prices rise, pay packages can swell beyond reported figures: General Electric Co. CEO Larry Culp received equity grants in 2020 originally valued at about $57 million that rose to $100 million by year’s end.
Some of the companies listed were keen to point out that the full sums shown were the best-case rewards, based on performance targets being met.
Paycom said the company must make significant market and operational gains for Mr. Richison to realize most of his pay, and noted he won’t be eligible for further equity grants for five years.
Some founders choose to draw no salary, or only a token sum, largely in cases where the value of their shares would make a salary irrelevant.
Twitter Inc.’s co-founder Jack Dorsey made $1.40—a penny for each character in the social-messaging platform’s original 140-character limit—and gas pipeline owner Kinder Morgan Inc.’s Steven Kean made $1.
The lowest-paid of all, at least as far as reported compensation goes, was Tesla Inc.’s TSLA -0.89% Elon Musk, one of the world’s richest executives. He reported zero pay for 2020—even as he raked in stock options worth $32 billion under his landmark 2018 pay package.
When Steve Jobs returned to Apple, he famously took a salary of $1 per year as an expression of his faith in the future of the company, taking most of his compensation in the form of stock.
It should be noted that there are different ways of ranking CEO compensation. Some rankings take into account the increase in share value for shares already held, and/or stock earned in previous years as it vests, both of which can show very different results.