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CNN business
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Corporate boards are slashing the pay of some key CEOs, and this may just be the beginning.
of salary cut We’re attacking some of America’s most famous and highly paid bosses, including: Apple CEO Tim CookMorgan Stanley CEO James Gorman and Goldman Sachs CEO David Solomon.
The move follows a terrifying year in stock markets – 2022 was the S&P 500 Worst year since 2008 – and appear as more and more companies dismiss general workers Prepare for a potential recession.
for example, Goldman Sachs lays off 3,200 employees Wall Street dealmaking faltered earlier this month.The bank then announced on Friday that Solomon’s 2022 salary will be reduced by nearly 30%Goldman Sachs’ profits fell 49% last year as a slowdown in dealmaking curbed advisory fees.
“This is a sign of solidarity. CEOs need to share the pain,” said Nell Minow, vice chairman of ValueEdge Advisors, which advises institutional investors on corporate governance issues.
Sundar Pichai, CEO of Alphabet, the parent company of Google, could take a similar pay cut.
(Google).
After Alphabet Announcement 12,000 reduction Pichai told employees earlier this month that top executives would take “very significant” pay cuts. business insider report. Google did not respond to a request for comment.
But don’t feel too sorry for these top executives. They still win pretty good cash and stock prizes, but not as much as they used to.
For example, Apple has said it will cut Cook’s target salary package by 40%. But that still leaves him with a hefty sum of $49 million.
“They’re still overpaying. Let’s be clear on that,” said Minow.
According to Equilar’s latest research, among the top 500 public companies by revenue, the median CEO will earn $14.2 million in fiscal 2021, an increase of 18.9% from the previous year.
Tech bosses are getting the biggest pay raises, with median CEO compensation rising 42.1% to reach $19.1 million in 2021, according to Equilar.
Earlier this month, Morgan Stanley announced that Gorman earned $31.5 million in 2022 total compensation, down 10% from the previous year. The Wall Street bank said its compensation committee had taken into account the fact that “in a difficult economic and market environment, the company’s performance in 2022 was not as strong as in the previous year,” which delivered record performance.
Minow is relieved that some boards are inflicting pain on CEOs.
“That’s how salaries are supposed to work,” says Minow. “Traditionally, the problem with wages is that it’s all upside, not downside. They were often to blame, and now they are forced to accept more responsibility.”
Of course, part of that liability comes because the rules have changed.
Since the Dodd-Frank Act of 2010, regulators have required publicly traded companies to provide shareholder input on compensation issues. The so-called “Say on Pay” vote is advisory, meaning the company can move forward even if his 100% of shareholders vote against it. Still, shareholder refusal of salary packages is an embarrassment companies try to avoid.
Last year, JPMorgan Chase took a hit with shareholders. voted against a massive $52.6 million retention bonus It was planned for CEO Jamie Dimon.
This month, JP Morgan reduced Dimon’s rewards to No Change at $34.5 Million – even though wages for the average worker are rising. Banks also said it had decided not to give Dimon this year’s special award.
This means that Dimon’s salary will not go down, even if many employees’ wages go up.