Even as the Covid-19 pandemic created record losses in the second quarter of 2020—and claimed the lives and livelihoods of millions of workers—median CEO pay in the U.S. increased yet again last year, according to a new analysis.
“It’s time for public policy to shift corporate America away from a business model that creates prosperity for a few at the top and precarity for so many of the rest of us.”
—Sarah Anderson, IPS
At a time when “CEOs’ big pay packages seemed to be under as much threat as everything else,” many boards of directors “made changes to the intricate formulas that determine” executive compensation to “make up for losses created by the crisis,” the Associated Press reported Friday.
“This should have been a year for shared sacrifice,” Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies (IPS), told AP. “Instead it became a year of shielding CEOs from risk while it was the frontline employees who paid the price.”
Despite the coronavirus-driven economic downturn, which reduced corporate profits and in theory should have lowered executive compensation, “the median pay package for a CEO at an S&P 500 company hit $12.7 million in 2020,” AP noted.
That’s “5% more than the median pay for that same group of CEOs in 2019,” the news outlet added.
To take one example, the cruise operator Carnival took a $10.2 billion hit last year, a reflection of the pandemic’s impact on the travel industry. Nevertheless, CEO Arnold Donald’s pay package in 2020 surged to $13.3 million—a 19% increase over the previous year and 490 times more than the company’s median worker pay, which is just $27,151.
As AP explained, Carnival cut Donald’s salary, but it also showered him with grants of restricted stock. The stock grants that Donald received were valued at $5.2 million, which helps explain how his pay rose while his company sank.
Before she testified at the March hearing on the nation’s income and wealth inequality crisis that was convened by Senate Budget Committee Chairman Bernie Sanders (I-Vt.), Anderson told Common Dreams that the rise of stock-based compensation for CEOs was one of the key drivers, along with a decades-long assault on labor unions, of the widening gulf between what corporate executives and typical workers are paid.
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