While 2020 was an unusual and unprecedented year, it also saw a period of economic recovery with record highs in the stock market. CEO pay at the S&P 500 rose accordingly, according to a pair of prominent annual pay studies by the
Wall Street Journal and
Associated Press (in conjunction with Equilar). Additionally, Equilar also published a report with the
New York Times. The New York Times only included the CEOs of the 200 largest companies, pushing its median CEO pay to $19.7 million. The WSJ study found that median CEO pay in the S&P 500 increased only slightly from $13.1 to $13.4 million, noting that many top earners were new to the top 10 due to the impact of the pandemic. The study is based on a review of companies filing proxies through May, excluding companies that changed CEOs or fiscal years in 2020. By contrast, the AP study showed a median of only $12.7 million, based on a review of S&P 500 companies filing by April 30, but including only CEOs that had served at least two years in role.
The discrepancy lies in both timing (the AP study excludes several high-earning new CEOs) and the definition of "pay." While the Wall Street Journal relies on the Summary Compensation Table definition of pay, which includes changes in pension value and above-market interest on deferred compensation, the AP study excludes both of these items, resulting in (in our opinion) a more accurate annual pay number.
The AP study found that although total compensation for CEOs rose 5% in 2020, this was largely driven by stock grants in a hot market; median salary actually decreased by 2.5% and annual cash bonuses decreased by 9.1% due to the pandemic. Meanwhile, median employee pay disclosed by those companies rose 2%.
The AP study's highest paid executive was Chad Richison of Paycom (due to a front-loaded 10 year grant), with last year’s highest paid, Lisa Su of Advanced Micro Devices, not even breaking the top 10. The overall number of female CEOs in the study fell from 20 to 16, compared to 326 male CEOs, making any comparison of median pay for male and female CEOs largely moot. Once again, the industry with the highest median CEO pay was communication services, with consumer defensive (food, beverage, household/personal products, etc.) seeing the largest gains.
