Pandemic-battered firms shower CEOs with riches
Boeing had a historically bad 2020. Its 737 Max was grounded for most of the year after two deadly crashes, the pandemic decimated its business, and the company announced plans to lay off 30,000 workers and reported a $12 billion loss. Nonetheless, its CEO, David Calhoun, was rewarded with some $21.1 million in compensation.
Norwegian Cruise Line barely survived the year. With the cruise industry at a standstill, the company lost $4 billion and furloughed 20% of its staff. That didn’t stop Norwegian from more than doubling the pay of Frank Del Rio, its CEO, to $36.4 million.
And at Hilton, where nearly a quarter of the corporate staff members were laid off as hotels around the world sat empty and the company lost $720 million, it was a good year for the man in charge. Hilton reported in a securities filing that Chris Nassetta, its CEO, received compensation worth $55.9 million in 2020.
The coronavirus plunged the world into an economic crisis, sent the U.S. unemployment rate skyrocketing and left millions of Americans struggling to make ends meet. Yet at many of the companies hit hardest by the pandemic, the executives in charge were showered with riches.
“Many of these CEOs have improved profitability by laying off workers,” said Sen. Elizabeth Warren, D-Mass., who has proposed new taxes on the ultrawealthy. “A tiny handful of people who have shimmied all the way to the top of the greasy pole get all of the rewards, while everyone else gets left behind.”
Eight of the 10 wealthiest people in the world are men who founded or ran tech companies in the United States, and each has grown billions of dollars richer this year, according to Bloomberg.
For example, Jeff Bezos, the founder of Amazon, which saw profits skyrocket with people stuck at home, is now worth $193 billion.
And, according to security filings, a select few are rapidly accumulating new fortunes. Chad Richison, founder and CEO of an Oklahoma software company, Paycom, is worth more than $3 billion and was awarded $211 million last year, when his company made $144 million in profit.
“We’ve created this class of centimillionaires and billionaires who have not been good for this country,” said Nell Minow, vice chair of ValueEdge Advisors, an investment consulting firm.
The gap between executive compensation and average worker pay has been growing for decades. CEOs of big companies now make, on average, 320 times as much as their typical worker, according to the Economic Policy Institute. In 1989, that ratio was 61-1. From 1978 to 2019, compensation grew 14% for typical workers. It rose 1,167% for CEOs.
Many companies defended their executive compensation plans. In some cases, CEOs took less than they were entitled to. Most top executives receive the bulk of their pay in shares, which may decrease in value and often vest over several years.