CEOs like Google's Sundar Pichai and Microsoft's Satya Nadella are among the most overpaid CEOs, according to a new report
Brittany Chang
Feb 25, 2021, 20:19 IST
Google CEO Sundar Pichai speaks during a developers conference.REUTERS/Stephen Lam
As You Sow has released its seventh annual report detailing the 100 most overpaid CEOs.
The top 30 CEOs on the list includes Alphabet's Sundar Pichai and Microsoft's Satya Nadella.
Nine companies have made the list every year, including Walt Disney, Goldman Sachs, and IBM.
CEOs like Alphabet's Sundar Pichai and Microsoft's Satya Nadella are among the top 100 most overpaid CEOs, according to a new report from As You Sow.
It's no secret that CEOs of S&P 500 companies make good money. However, As You Sow's list doesn't rank by the size of a CEO's salary. Instead, the corporate responsibility non-profit uses different metrics to identify whether or not a CEO is being overpaid.
To do this, the study took three main factors into account: the amount of extra dollars a CEO receives based on past company performance and pay, the number of shareholders who voted against a CEO's pay package, and the ratio comparing the executive's compensation to the company's median employee pay. The latter was weighed less heavily.
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Coincidentally, the highest salary on the list happens to belong to the most overpaid CEO: Alphabet's Sundar Pichai, who receives a pay of $280,621,552, according to the report. To compare, the median pay of Alphabet workers sits at $258,708, which is a CEO to worker pay ratio of 1,085 to one.
Pichai is being paid an excess of $266,698,263, according to As You Sow.
The median pay of Microsoft's employees is $172,512, which is a CEO to worker pay ratio of 249 to one.
Several social media companies are seen as giants in Silicon Valley, but only one was included in the report: Mark Zuckerberg, Facebook's CEO, in 73rd place. Zuckerberg has a pay of $23,415,973, which, according to the study, contains an excess of $9,479,977.
To compare, the median employee pay at Facebook is $247,883. This amounts to a CEO to worker pay ratio of 94 to one, lower than both Microsoft and Alphabet's.
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However, the list wasn't just dominated by tech leaders. Bob Iger, the former CEO of the Walt Disney Company, Lachlan Murdoch of Fox Corporation, and Miguel Patricio of the Kraft Heinz Company were all listed among the top 30 most overpaid CEOs.
And according to the study, companies that have consistently graced the list are performing worse than those that have never been mentioned. As You Sow has published this report annually since 2015, and nine CEOs have made the list every year, amounting to a total pay of $2 billion. However, these nine businesses have seen a lower annualized shareholder return compared to S&P 500 companies that have never made the overpaid CEO list.
These nine companies include: Discovery, Walt Disney, Comcast, AT&T, Goldman Sachs, IBM, McKesson, Ralph Lauren, and Regeneron.
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This consistent overpaying of CEOs can signal several concerns, specifically "poor accountability, weak governance, and lack of concern for shareholder interests," the study notes.
However, this overcompensation issue may soon be changing as more shareholders are beginning to vote against these hefty CEO paychecks, according to Rosanna Landis Weaver, the report's author.
"We might be going into a spring where we see higher votes against pay, particularly at companies that try to insulate their executive compensation from the effects of the COVID-19 pandemic," Weaver told Insider.
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These were the top 30 most overpaid CEOs, according to As You Sow's new report:
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