September 8, 2020

Washington Post: Average CEO earnings soared to $21.3 million last year and could rise again in 2020 despite the coronavirus recession

by Jena McGregor

Average CEO earnings soared to $21.3 million last year and could rise again in 2020 despite the coronavirus recession.

Robin Ferracone, CEO of executive compensation consultancy Farient Advisors, said that while a rise in average 2020 pay for CEOs is possible, it will probably be flat or a little down at the average. In addition to salary cuts and probably lower annual bonuses, many long-term stock incentives for CEOs are called “performance shares,” which are tied to underlying financial metrics that are likely to worsen for many companies.

Still, she said, compensation committees will need to be mindful about how results will resonate with employees, outsiders and investors.

“If a median worker feels prosperous and that they’ve been treated pretty well, they’re fine with the CEO taking home millions upon millions,” she said. “The problem is when the median worker is no longer feeling prosperous. … That is going to be the test this year.”

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