PANDEMIC REWARDS CEOs WITH RICHES – And Income Inequality Keeps Getting Wider

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by Dave Allen, The International Forecaster:

At its worst last spring, over 20 million Americans were laid off or furloughed — suddenly jobless and struggling to make ends meet month after month after month.

Yet, as New York Times writer David Gelles revealed over the weekend, the executives in charge of many of the companies those millions of unemployed once worked for “were showered with riches.”

Hopefully, a few years from now, those of us who survived the current pandemic — from both a health and financial standpoint — will have so much to look forward to that we won’t be looking over our shoulders.

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Today, though, is another story. As the pandemic rages on across the U.S. and the globe, we’re stuck wondering when — if — the health crisis and the worst economic downturn since the Great Depression will end.

At its worst last spring, over 20 million Americans were laid off or furloughed — suddenly jobless and struggling to make ends meet month after month after month.

Yet, as New York Times writer David Gelles revealed over the weekend, the executives in charge of many of the companies those millions of unemployed once worked for “were showered with riches.”

Here are just a few examples Gelles presented:

Boeing had a historically bad 2020. Its 737 Max was grounded for most of the year after two deadly crashes, the company announced plans to lay off 30,000 workers and it reported a $12 billion loss.

Its CEO David Calhoun was rewarded with $21.1 million in compensation.

Norwegian Cruise Line barely survived last year. The company lost $4 billion and furloughed 20% of its staff.

Its CEO Frank Del Rio was rewarded with a doubling of his pay to $36.4 million.

And at Hilton, a quarter of the corporate staff were laid off as the company lost $720 million.

Its CEO Chris Nassetttta was rewarded with compensation worth $55.9 million.

THE HIGHEST-PAID CHIEF EXECUTIVES

Based on data from Equilar, the New York Times staff compiled the compensation received last year by the 20 highest paid CEOs; we list the top 10.

(The figures shown below reflect salary, stock grants, bonuses and other benefits.)

 

Company & CEO – Pay (millions)

Paycom, Chad Richison – $211.13

1Life Healthcare, Amir Dan Rubin – $199.05

T-Mobile, John Legere – $137.20

General Electric, Larry Culp – $73.19

Hilton, Chris Nassetta – $55.87

T-Mobile, Mike Seivert – $54.91

Liberty Media, Greg Maffei – $47.12

Netflix, Reed Hastings – $43.23

Netflix, Ted Sarandos – $39.32

ViacomCBS, Robert Bakish – $38.97

It’s the quintessential Haves-vs.-Have-Nots dichotomy out there.

Executives are making fortunes, while stressed-out, laid-off workers are waiting in long lines at food banks and hoping to be hired back before their benefits run out.

The executives who own large stakes in the multinationals have seen even more distinct gains.

Gelles reports that 8 of the 10 wealthiest people in the world are men who founded or ran tech companies in the U.S., and each has grown billions of dollars richer this year.

Amazon founder Jeff Bezos oversaw skyrocketing profits last year while people were stuck at home; he’s now worth $193 billion.

Google co-founder Larry Page is worth $103 billion — up $21 billion in the last four months alone.

Paycom founder and CEO Chad Richison is worth more than $3 billion and was awarded $211 million last year, when his company made $144 million in profit.

T-Mobile’s former CEO John Legere was awarded $137.2 million last year, his reward for taking over rival Sprint.

A former boss and mentor once counseled me to not begrudge someone making a lot of money, more money than you.

It was a valuable life lesson for a young professional that still resonates today.

THE HAVES VS. HAVE NOTS

Here’s the thing, though: The gap between executive compensation and average worker pay has been growing for decades.

A landmark study by the Economic Policy Institute last year showed that big company CEOs make, on average, 320 times more than their typical worker. That ratio was as narrow as 21 to 1 in 1965 and 61 to 1 in 1989.

From 1978 to 2019, compensation grew less than 14% for typical workers, while rising 1,167% for CEOs — once again showing it’s good to be king.

Gelles points out that the pandemic only compounded these differences.

“[H]undreds of companies awarded their leaders pay packages worth significantly more than most Americans will make in their entire lives.”

AT&T lost $5.4 billion and cut thousands of jobs last year. CEO John Stankey was rewarded $21 million for his work in 2020 (although that was less than the $22.5 million he got in 2019).

T-Mobile said it would create new jobs through its merger with Sprint, but has already begun layoffs. It made $3.1 billion in 2020.

In addition to Legere’s windfall upon leaving, the company awarded its new CEO Mike Sievert $54.9 million.

Tenet Healthcare furloughed about 11,000 workers during the pandemic and made nearly $399 million in profit. Its CEO Ronald Rittenmeyer was rewarded with $16.7 million last year.

These big companies always seem to say their employees are their most important asset. But here’s a case where their actions speak much larger than their words.

Many companies defend their executive compensation plans. In some cases, they say, CEOs took less than they were entitled to.

They say that because most top executives receive the bulk of their pay in stock shares, they may decrease in value and often vest over several years.

More investors and corporate governance groups are pushing back on executive compensation plans.

For instance, Starbucks shareholders voted last month against the compensation plans for the company’s two top executives.

The resolution was nonbinding, however, and CEO Kevin Johnson received $14.7 million in cash and stock last year.

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