CEO pay surged in 2020, a year of historic business upheaval, a wrenching labor market for many workers and unprecedented challenges for many leaders.
Median pay for the chief executives of more than 300 of the biggest U.S. public companies reached $13.7 million last year, up from $12.8 million for the same companies a year earlier and on track for a record, according to a Wall Street Journal analysis.
Pay kept climbing in 2020 as some companies moved performance targets or modified pay structures in response to the Covid-19 pandemic and accompanying economic pain. Salary cuts CEOs took at the depths of the crisis had little effect. The stock market’s rebound boosted what top executives took home because much of their compensation comes in the form of equity.
In some cases, investors have responded by withholding support for company pay practices in annual advisory votes, increasing pressure on corporate boards. With the annual-meeting season only just beginning—80% of the S&P 500 have yet to hold their votes, according to pay data firm Equilar—shareholders have given a thumbs down to pay arrangements at a dozen big companies, including Starbucks Corp. and Walgreens Boots Alliance Inc.
“I don’t think we’ve ever seen anything like this before in terms of the number of changes we’ve seen in incentive plans” during the pandemic, said Shaun Bisman, a pay and corporate-governance consultant at Compensation Advisory Partners in New York.