The salaries of Fortune 100 CEOs are a hot topic, and for good reason. They're often in the millions, with some topping $100 million.
According to the data, the average salary of a Fortune 100 CEO is around $20 million. This is a staggering number, especially when you consider that the median household income in the US is around $67,000.
But what's driving these high salaries? Is it performance-based, or is it just a matter of prestige and power? The answer lies in the fact that many CEOs are granted stock options and bonuses, which can greatly increase their take-home pay.
These perks can add up quickly, making the average CEO salary more like $50 million or more.
Here's an interesting read: Salaries at Ubs
Top Paid CEOs in America
The top-paid CEOs in America are making some serious bank. James R. Anderson, the CEO of Coherent Corp, took home a total compensation package of $101.5 million.
Among U.S. companies with revenues of $1 billion or more, Anderson was the highest-paid CEO last year. Coherent Corp is a global leader in materials, networking, and lasers, which likely contributed to Anderson's hefty pay package.
Starbucks CEO Brian Niccol came in second with a total compensation package of $95.8 million. He received this award following his appointment in September 2024, and more than 90% of it was in the form of long-term equity awards.
Suggestion: Zoho Corp Ceo
CEO Perks
RJ Scaringe, the head of EV maker Rivian, received $126,000 in assorted perks as part of his pay package.
Some CEOs are more fortunate than others when it comes to perks. Tim Cook's performance-based equity award is increasing by 25%.
Rivian's stock value has plummeted from $172 to about $13 since November 2021, causing Scaringe's fortune to drop significantly.
Perks can be a significant part of a CEO's compensation package. For example, Sue Nabi received $42,500 in undisclosed perks in 2021.
Here's a breakdown of the total compensation for some of the CEOs mentioned:
- RJ Scaringe: $283.79 million
- Tim Cook: $556 million
- Sue Nabi: $3.55 million (salary) + $42,500 (perks) + $280 million (stock award)
Peter Rawlinson's target cash incentive for 2022 was 100% of his salary, which could have nudged him above the $1 million mark.
Methodology
Data collection for this study took place in September 2023.
The image of 'Michael', the average Fortune 100 CEO, was created by aggregating and merging images of Fortune 100 CEOs from various sources, including official company websites and LinkedIn profile pictures.
Pay and Governance
CEO compensation is often tied to corporate governance, but it's not a straightforward relationship. Research by Amit Seru, a professor of finance at Chicago Booth, suggests that some CEOs manipulate performance measures to increase their pay.
Powerful CEOs may pressure boards to use performance measures that show their performance in the best possible light. This can lead to a significant portion of the fluctuation in incentive pay being explained by rigged performance measures, up to 30% according to Seru's research.
The use of equity-based pay, such as stock options and restricted stock, has increased in executive compensation packages. However, a study by Marianne Bertrand and Sendhil Mullainathan finds that CEOs can receive big rewards for factors beyond their control, like increases in oil prices.
In poorly governed firms, particularly those without large shareholders, "pay for luck" is strongest. This means CEOs are paid for factors beyond their control, undermining the effectiveness of incentive contracts.
The data on CEO compensation don't support the popular narrative that CEO pay has skyrocketed. In fact, between 2000 and 2011, CEO pay in real terms decreased by 46% in the United States.
Readers also liked: Share Broker Salary
Featured Images: pexels.com
