As COVID-19 ravaged the world this past year, CEOs’ big pay packages appeared to be under as much danger as everything else.

Fortunately for those CEOs, many had boards of directors willing to see that the pandemic as an outstanding event beyond their control. Across the nation, boards made changes to the intricate formulas that determine their CEOs’ pay — and other motions — that helped compensate for losses produced by the crisis.

Because of this, pay bundles rose yet again last year for the CEOs of the biggest businesses, though the pandemic delivered the market to the worst quarter on record and slashed corporate earnings across the world. The median pay package for a CEO in an S&P 500 firm struck $12.7 million in 2020, based on data analyzed by Equilar for The Associated Press. That means half of the CEOs in the poll made more, and half made less. It’s 5% more than the median pay for that same group of CEOs in 2019 and an occupancy from the 4.1% rise in last year’s survey.

Extended sick-pay advantages and expenses for hand sanitizer and other safety equipment totaling $60 million dragged on two key measurements that help establish his performance cover. But since the board’s compensation committee saw these costs as extraordinary and unanticipated, it excluded them from its own calculations. That aided Greco’s total compensation rise 4.7percent last year to $8.1 million.

At Carnival, the cruise operator gave stock grants to executives, in part to encourage its leaders to stay with the firm as the pandemic compelled it to halt sailings and furlough workers. For CEO Arnold Donald’s 2020 settlement, these grants were valued at $5.2 million, even though their entire value will finally depend on how the business performs on carbon cuts and other steps in coming years.

Meanwhile, regular employees also saw profits, but not in precisely the same speed as their bosses. And countless others lost their jobs.

Wages and benefits for all employees beyond the government climbed just 2.6% this past year. That’s based on U.S. government information that discount the effect of workers shifting between different businesses. It is a significant distinction because more lower-wage earners lost their jobs as the economy shut down than specialists who could work from home.

“This should have been annually for shared sacrifice,” said Sarah Anderson, who directs the global economy job in the left-leaning Institute for Policy Studies. “Rather it became a year of protecting CEOs from danger while it was the frontline employees who paid the price.”

The AP’s payment study comprised pay data for CEOs at S&P 500 companies who have served at least 2 full financial years in their companies, which filed proxy statements between Jan. 1 and April 30. It doesn’t include some highly compensated CEOs who don’t match that criteria. The cover amounts for CEOs occasionally include grants of stock and options they may never receive unless they hit certain performance goals.


Last year’s 5% profit for median CEO pay masks just how much variation in cover there was beneath the surface. Some companies thrived as an immediate effect of the pandemic. Sales prospered for Lowe’s amid a great nesting across the country, also CEO Marvin Ellison’s pay almost doubled after its stock more than doubled the S&P 500′s total yield through its financial year.

At Duke Energy, the board reduced CEO Lynn Good’s short-term performance cover following its earnings per share fell short of its initial goal, partly because industrial customers used less power during the pandemic. Good’s pay dipped 2.6percent to $14.3 million, although earnings ended up over the range Duke prediction for Wall Street early in the year. Duke did not adjust formulas to raise Good’s cover due to the pandemic.

Overall, 61 percent of those 342 CEOs in this year’s poll did get a boost in compensation last year. That’s almost the specific same percentage as the 62% in 2019, when the market and corporate earnings were growing.

That is also despite many CEOs taking high-profile cuts to their wages during the year as an act of shared sacrifice and also to save a bit of cash for the company. Approximately one of every five CEOs in this year’s survey had a smaller salary for 2020 compared to year earlier.

But wages is often only a minor piece of a CEO’s total compensation, which can be derived from notoriously complex formulas. Each year, companies fill pages of the proxy statements with charts and footnotes demonstrating how the majority of their CEO’s pay rises and falls with corporate performance. It is here, at the nuanced area, where lots of businesses adjusted levers that ultimately helped CEOs get more in reimbursement.

Boards typically stick together with the formulations set for CEO pay early every year, but the international market’s sudden crash forced a reconsideration. What made things even cloudier was that they had several historical guides for how to move.

“Many committees asked us this very question: Does this compare to the financial crisis? What did people do then?” Said Melissa Burek, spouse at Compensation Advisory Partners, a consulting firm which works with boards.

But the pandemic was quite different than the 2008 economic collapse, mainly since this crisis was caused by a virus, rather than by CEOs taking on too much debt and risk. As boards corrected targets to make CEOs’ incentive cover less challenging to get, many also restricted the size of the possible payouts.

“I think there is a recognition, when unemployment is so large, of: Do we feel great about paying our CEO at this degree?” Said Kelly Malafis, plus a partner at Compensation Advisory Partners, of their believing by boards of directors. “The response is:’We are doing this for performance. When performance is not good, we do not pay. When performance is great, we do cover. ”’

In Carnival, as an example, the company says that a lot of its CEO’s compensation is tied to the company’s operational and financial performance. The business said Donald received no cash bonus tied to 2020. And to preserve cash in the pandemic, the company gave him grants of restricted stock instead of salary from April through June.


Companies have to demonstrate how much longer their CEO makes compared to their typical worker, along with the median in this year’s survey was 172 times. That’s up from 167 days for the very same CEOs this past year, and it means employees should work tirelessly to make what their CEO does in just a year.

1 invoice in Congress proposes to increase taxes on corporations where the CEO makes 50 times or longer compared to the median employee at the company.

At some companies, investors are pushing back on reimbursement packages accepted by the board.

At the yearly meeting of Chipotle Mexican Grill’s shareholders earlier this month, only 51% of voting shares gave a thumb’s up to its executives’ pay packages, in comparison to 95% a year earlier. Across the S&P 500, these”Say-on-pay” votes routinely get more than 90% approval.

Chipotle’s board excluded three weeks of sales results in the worst of the pandemic, together with several other things, while calculating cover for its CEO, Brian Niccol. He enabled him to secure bigger compensation than he’d have otherwise.

Chipotle called the move a one-time alteration that is not reflective of Niccol’s continuing pay package. Chipotle was one of the relative winners of this pandemic, with earnings rising 7.1% and its stock soaring 65.7%.

Between 2017 and 2019, stocks of companies that neglected their votes lagged aggressively behind the S&P 500 in the subsequent 12 months, according to Morgan Stanley.

The trend didn’t hold last year, when the pandemic may have unsettled everything, but Morgan Stanley strategists say that they see failed”Say-on-pay” votes as a red flag that a stock could struggle.

And if there’s anything that investors on Wall Street care about, it’s how well they’re getting compensated.