Investors took a big financial shellacking last year — with the S&P 500 falling nearly 20%. But many CEOs of the companies with shares in free fall still got a raise. And a big one.
CEOs of S&P 500 companies that dropped 30% or more in stock value last year — including Dish Network, Equifax and Prologis — were paid an average of 12.8% more in 2022 than they were in 2021, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Only CEOs at the helm for all of 2021 and 2022 were included in the analysis.
Getting a big raise when investors suffer big losses doesn't sit well. Investors lost an average of 42% of their money in 2022 on shares of the falling companies even as they paid their CEOs more.
Such events turn heads. More than two-thirds of Americans said they were concerned about the pay disparity between workers and management in a January IBD-TIPP poll. And seeing CEOs get raises while stockholders take a hit reinforces the idea many Americans have about executive compensation not being aligned with shareholder interests.
S&P 500 CEO Pay Being Released
Now's the time of the year that most S&P 500 companies disclose their 2022 CEO pay packages to investors. But this year's pay reporting season is different from years past. Why? 2022 was one of the first times in recent memory that S&P 500 investors lost money.
Last year's drop in the S&P 500 ranks as the sixth worst from 1930, says "Stock Trader's Almanac."
And yet, with more than 80% of companies reporting their current CEO pay, the average paid among that universe is nearly $16 million. That's up from $15.8 million in 2022, despite investors losing more than $9 trillion in wealth during 2022, says Wilshire Associates. Keep in mind that some CEOs were new in 2021 and 2022.
Watching CEOs of company with big drops in share prices in 2022 isn't the narrative many managers wanted to portray. Some CEOs in 2022 agreed to high-profile pay cuts in light of their shares' poor performance in and company layoffs.
CEOs at Alphabet, Goldman Sachs and Amazon.com all said they would take pay cuts in 2022. Goldman Sachs CEO David Solomon saw his total reported pay fall more than 20% in 2022. Shares of Goldman fell 10% in 2022.
And yet, roughly 60% of the CEOs at companies where shares dropped 30% or more still managed to get paid more.
Dishing Out Big Paychecks With Falling Shares
Dish Network, a company selling satellite communications, is the largest disconnect. Shares of the stock plunged more than 56% in 2022. And it wasn't just a volatile time for the stock price — which the CEO cannot directly control. The company's adjusted profit per share fell nearly 5% to $3.61. And analysts think it will fall an additional 68% in 2023.
And yet Erik Carlson, CEO since 2017, saw his total reported compensation vault more than 270% to $10.8 million. Carlson's total pay is roughly 150 times higher than the average employee's pay of $72,514. The company's regulatory filing said Carlson was actually only paid $4.5 million if you discount select stock awards. But even on that adjusted basis, his pay still rose 60% from 2021.
Another company where the CEO scored while shareholders suffered was Equifax, an industrial company that helps manage employee data. Shares tanked by a third in 2022. And yet Mark Begor, CEO since April 2018, saw an impressive pay hike of 132% to $37.2 million based on reported total compensation.
That payday is much larger than the typical S&P 500 company's CEO is paid. And it's also nearly 350 times higher than the median employees' $107,256 annual pay. The company's filing states that Begor wasn't actually paid $37 million if you discount $35.1 million in stock awards and $21.2 million in equity values.
Investors' and CEOs' incentives are supposed to be aligned. But in 2022, it looks like investors took the brunt of much of the S&P 500's pain.
S&P 500 CEOs Gain As Investors Feel The Pain
Largest gains in CEO pay among stocks down 30% or more in 2022
| Company | Ticker | CEO | Stock price change in 2022 | CEO pay change in 2022 | Sector | 2022 as reported total pay (in millions) |
|---|---|---|---|---|---|---|
| DISH Network | Carlson, W. Erik | -56.7% | 273.7% | Communication Services | $10.8 | |
| Equifax | Begor, Mark W. | -33.6 | 131.8 | Industrials | $37.2 | |
| Prologis | Moghadam, Hamid R. | -33.0 | 93.4 | Real Estate | $48.2 | |
| Western Digital | Goeckeler, David V. | -51.6 | 88.0 | Information Technology | $32.1 | |
| Ceridian HCM | Turner, Leagh Erin | -38.6 | 63.1 | Information Technology | $10.6 | |
| Paramount Global | Bakish, Robert Marc | -44.1 | 59.9 | Communication Services | $32.0 | |
| Extra Space Storage | Margolis, Joseph Daniel | -35.1 | 58.9 | Real Estate | $11.6 | |
| Accenture | Sweet, Julie T. Spellman | -35.6 | 46.0 | Information Technology | $33.7 | |
| Invitation Homes | Tanner, Dallas B. | -34.6 | 45.9 | Real Estate | $14.2 | |
| Camden Property Trust | Campo, Richard J. | -37.4 | 44.1 | Real Estate | $6.2 |
Sources: S&P Global Market Intelligence, IBD, using fiscal 2022 as reported total compensation; excludes new CEOs in 2021 and 2022
Follow Matt Krantz on Twitter @mattkrantz
