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Media, entertainment and technology companies maintained their spot in the top 25 rankings of overpaid CEOs in 2022 by the non-profit As You Sow. Live Nation’s Michael Rapinoe topped the list with $139 million, which also included Netflix, Paramount Global and Warner Bros Discovery, as well as Charter, Apple and Alphabet.
Overall CEO pay has been front and center this year during a season of record labor unrest from writers and actors to auto workers. We won’t know the 2023 payments for most companies until next spring.
The Shareholder Protection Group’s ranking of S&P 500 companies, which is 10th, is special because it starts with pay, data published months ago, and calculates what it calls overpayment by measuring compensation against three metrics: total shareholder return; The number of shares voted against the CEO’s pay package at the annual meeting; and the ratio of CEO pay to average worker pay – a gap that has been steadily increasing and is under scrutiny by unions and policymakers.
As You Sow weights the first two data points 40% each, and the payout 20% to develop its ranking. The numbers are for the 2022 batch, and are the latest available. The 2023 payment packages will begin rolling out in April to businesses in the calendar year.
CEO pay packages include salary and bonuses as well as stock options and grants that vest over time and may be underwater. However, grants tend to be awarded year after year. Shareholder votes on pay are only advisory, meaning they are not binding, but loud “no” votes don’t look good.
Using its metrics, the company pegged Rapinoe’s overpayment at $123 million, and noted that about 81% of institutional shares and 54% of reported shares voted against his 2022 package. The pay ratio — CEO compensation compared to average worker pay — was 5,414 to 1.
Live Nation noted in its proxy (a Securities and Exchange Commission filing detailing the pay of the company’s five highest-compensated executives) that a significant portion of its employees are part-time, seasonal and temporary workers with “relatively low total compensation.” About $109 million of Rapinoe’s package was tied to a five-year employment agreement renewal. Excluding that, and comparing his compensation only to full-time salaried U.S. employees, the pay ratio would be 353 to 1, the company said.
“In a year marked by labor strikes that use large pay disparities to measure the extent to which workers are undervalued, investors and companies alike can use this tool to hold executives to higher standards of individual and corporate performance going forward,” As You Sow said in its report. .
Netflix came in at no. On October 7, co-CEOs Reed Hastings and Ted Sarandos each received $101 million, about $50 million each, and about $86 million in excess pay, As You Sow reported. More than 70% of shareholders voted against the executives and Netflix promised to make some changes to its pay policies this year. Greg Peters and Sarandos have been co-CEOs since January after Hastings stepped down.
Former Charter CEO Tom Rutledge (resigned in December 2022) came in first. 10 with $39.2 million and a pay ratio of 707-to-1.
Paramount Global CEO Bob Bakish was not. 16 for $32 million, a ratio of 291 to 1.
The CEO of Warner Bros. moved on. Discovery David Zaslav to no. He ranked 25th with a package worth $39 million and a payout ratio of 227 to 1. He topped the previous list in 2021 with a package estimated at $246 million, inflated by a massive stock options grant. WBD also revised its CEO pay formula. Zaslav, in an interview with The New York Times, said he didn’t mind overpaying writers.
High CEO pay and pay disparity have been a rallying cry in recent labor disputes by Hollywood unions, the UAW and others. In reference to this, the Senator said: Sheldon Whitehouse (D-Rhode Island) and Reps. Barbara Lee (D-Calif.) and Alexandria Ocasio-Cortez (D-N.Y.) earlier this month introduced the Reduce Excess Executive Compensation (CEO) Act, which would apply an excise tax to companies with… At least a 50 to one pay disparity between the CEO and the average worker. In 2022, the CEO Act would have raised more than $10 billion from the 100 largest U.S. companies alone, policymakers estimate.
“There is no justification for a CEO to earn hundreds of times what the average employee at his company earns. It is a sign of sickness in society and a burden on our economy. Congress must step in and correct the miserable abuses of the CEO,” Whitehouse said when announcing the bill. “.
The tax, which could have a tough road in D.C., would apply to companies with more than $100 million in revenue and $10 million in payroll. The rate imposed will be proportional to the amount of executive compensation (including salaries, bonuses, stock awards and options) and the degree to which the pay ratio exceeds 50 to 1. The tax will be limited to one percent of the company’s total. Receipts.
High CEO pay is hard to beat, as companies and CEOs continue to look across their businesses at “peer groups” and what competitors are paying.
But, according to As You Sow, moderation in CEO pay can be a good business proposition. In general, it said, companies with overpaid top executives generated lower shareholder returns than the average of S&P 500 companies.
