8 CEOS OWN BILLIONS IN COMPANY STOCK
Ex- CEO’s haul at Wells Fargo just a drop next to Zuckerberg, Buffett, Bezos
Pensions, 401( k) s and Social Security might be critical for most people planning their future. But not so much for CEOs who have steadily accumulated massive pieces of their companies worth billions.
At the extreme, there are eight current CEOs of companies in the Standard & Poor’s 500 index, including Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway and Mark Zuckerberg of Facebook, who own shares in their companies valued at $ 2 billion or much more apiece, according to a USA TODAY analysis of data from S& P Global Market Intelligence. Bezos’ rapidly appreciating stake in his online retailer is so lucrative — valued at $ 67.1 billion — he passed Warren Buffett as the current CEO with the biggest piece of his company.
The growing trend of companies paying
CEOs in stock has shifted the balance of power between companies and their chief executives. CEOs of companies in the Standard & Poor’s 500 own a median value of $ 17.3 million in their company stock. Most walk with that money no matter if they have official retirement or severance plans.
“Compensation plans are set up so executives’ motivation is aligned with creating value for shareholders,” says Dan Marcec, director of content at executive compensation firm Equilar. But when CEOs become wealthy on company stock, and the company doesn’t have much financial leverage, does that create unintended consequences?
The value of CEOs’ stock holdings came into sharp focus following the retirement of longtime Wells Fargo CEO John Stumpf. He stepped down amid a scandal in which employees allegedly opened upward of 2 million accounts without customer consent. Stumpf didn’t receive severance or retirement from the bank but had accumulated wealth through stock grants to the tune of $ 134.1 million, which he still gets, says Equilar.
It’s not an accident. Modern corporate governance practices call for top executives to own six times their annual base salary in company stock, says Marcec. That would mean the median CEO would need to own about $ 6 million in company stock to satisfy investors who want to see executives’ fortunes tied with the company’s.
Bezos’ stake in the company has grown $ 11.8 billion just this year. Investors are hoping Buffett, 86, never retires. But with holdings valued at $ 63.9 billion in Berkshire Hathaway, that would pay for plenty of Diet Coke in his golden years. Then there’s Zuckerberg, 32, who has seen his share in Facebook rise to a value of $ 53.4 billion.