CEO Pay Rebounds as Stock Market Soars
After experiencing a lull last year, the heads of some of America’s biggest companies are enjoying pay rises again as a recovering economy and election of Donald Trump boosts the stock market.
The CEOs of America’s 104 biggest companies experienced a pay rise in 2016 of 6.4%, according to an analysis by the Wall Street Journal. Some, including Apple’s Tim Cook and GE’s Jeff Immelt took pay cuts. Overall, however, twice as many CEOs got a pay rise last year than a cut.
Among some of the highest-paid executives were Hewlett-Packard CEO Meg Whitman, whose package more than doubled to $35.6 million after she helped split the computer company in two. IBM CEO Ginni Rometty also had a good year, enjoying a 65% raise to $32.7 million.
WSJ’s analysis showed the median salary of the sampled CEOs rose to $11.5 million, up from the $10.8 million attributed to a broader sample in 2015.
The resurgence came after the benchmark S&P 500 index rose by around 10%, pushing up the value of stock options that are comprising an increasingly larger proportion of executive remuneration policies.
It’s unclear, though, whether the general public’s appetite for larger CEO pay packets has risen in conjunction with the stock market, says Aktien Kaufen Online in a post. Average hourly earnings for American citizens in February increased by 2.8% on an annualized basis, according to the Bureau of Labor Statistics, indicating they’re not growing as fast as executive earnings.
Broader economic conditions have certainly improved, with unemployment down to 4.7%. And the president has shown an enthusiasm for dismantling regulations around executive pay imposed by his predecessor.
The Obama administration introduced rules that would force companies to disclose the ratio of a CEO’s pay compared to that of rank and file employees. Trump, however, had indicated the policy is under review.
That hasn’t stopped some companies, including Goldman Sachs, BP and Unilever, from rejigging their remuneration policies amid calls from some big institutional investors to more closely align pay with long-term performance.
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