Category: WSJ

Coronavirus Caps Years of Rich Pay for Many CEOs

Chief executives of large U.S. companies rode a more than decadelong bull market to a string of record pay days.

Now, the stock market’s coronavirus-fueled swoon could wipe out hundreds of millions of dollars from executive pay packages and prompt a recalibration of how CEO compensation is set.

The potential losses highlight the flip side of stock-based compensation, experts say. The rout, which has destroyed trillions of dollars in market value for millions of retirees and investors, also is taking a chunk out of the equity awards that lifted many CEOs’ pay to all-time highs in recent years.

For 143 CEOs of S&P 500 companies, the median compensation in 2019 was $13 million, up from $11.2 million for the same group in 2018 and on pace to set a record if the pattern holds for the 2019 data, according to a Wall Street Journal analysis.

The Journal analysis uses total compensation, including salary, bonus and stock awards as they are valued in securities filings and provided by MyLogIQ, a research and data firm.

Bank of America Keeps CEO’s Pay at $26.5 Million

Bank of America Corp. greenlighted a $26.5 million pay package for its top executive in 2019 after the bank’s shares marked their best run in years.

Brian Moynihan is set to receive compensation that matches the preceding year’s package. His pay includes a $1.5 million base salary and $25 million worth of restricted stock, the bank said in a regulatory filing Friday.

His 2019 earnings put him slightly below other Wall Street chiefs like JPMorgan Chase & Co.’s James Dimon, who made $31.5 million, and Morgan Stanley’s James Gorman, who made $27 million.

In 2018, Mr. Moynihan was the 10th highest-paid among the 75 CEOs in the S&P 500 financial sector, according to a Wall Street Journal analysis of pay data from MyLogIQ LLC.

Viacom and CBS Executives to Earn Big Bucks in Merger Deal

The merger of Viacom Inc. and CBS Corp. will be lucrative for the top executives of both companies.

Viacom Chief Executive Bob Bakish, who will become president and CEO of the combined company, ViacomCBS, has signed a new contract ending four years after the deal closes. The contract lists salary, bonuses and other incentives worth about $31 million a year, roughly 55% higher than Mr. Bakish’s total compensation in the most recent fiscal year, the company said in a securities filing.

Acting CBS Chief Executive Joe Ianniello, who will be chairman and CEO of CBS at ViacomCBS reporting to Mr. Bakish, will receive a payout of about $70 million when the deal closes. That payment resulted from a provision in his old contract at CBS that entitled him to a lump sum if he wasn’t named CEO of the combined company in the event of a merger.

Wall Street Chiefs’ Pay Doesn’t Sync With Returns

Wall Street companies delivered significant losses to their shareholders last year, but the pain didn’t spread to the top.

The chiefs of banking and financial institutions in the S&P 500 received a median raise of 8.5% last year, compared with 5.6% for CEOs in the broader index, according to a Wall Street Journal analysis.

Meanwhile, firms in the sector posted a median total shareholder return—or stock-price changes plus dividends—of negative 17% in 2018, while the median return for the index as a whole was negative 5.8%.

Median pay for finance CEOs was $11.4 million for the year, $1 million below the overall S&P 500 median. The Journal analysis uses total compensation as specified by Securities and Exchange Commission regulations, which includes salary, annual bonuses, and long-term equity and cash incentives. It also includes perquisites and the value of pension gains and some increases in deferred compensation accounts.

Media CEOs Reigned in 2018 Pay

Media titans came under heavy scrutiny in 2018 for their business practices and deal making, but they were well-compensated for their trouble.

The S&P 500’s communication-services sector, a group that includes Facebook Inc., Walt Disney Co. and AT&T Inc., posted a median CEO pay of $22.6 million in 2018, according to a Wall Street Journal analysis, higher than any other sector and more than $10 million above the median pay of S&P chief executives as a group.

The sector included two of the five highest-paid CEOs in the Journal’s analysis of the index. David Zaslav of Discovery Inc., one of the sector’s smallest companies, had a $129.4 million pay package, more than any other CEO, as the owner of television networks such as Discovery Channel, HGTV and Food Network posted a total shareholder return of 10.6% for the year. A spokesman for Discovery said Mr. Zaslav’s compensation is mostly made up of performance-based equity over the next five years and is 97% at risk

Strong Returns Lift Pay for Software CEOs

PayPal Holdings Inc.’s PYPL -1.79% Daniel Schulman collected a pay package totaling $37.8 million in 2018, making him one of the highest-paid bosses in the S&P 500. But for Mr. Schulman and many of his fellow CEOs in the software industry, big paydays were backed by healthy returns.

Most companies selling software and related services thrived last year, with half delivering a total shareholder return of at least 10.3%, a Wall Street Journal analysis shows. That success translated to their CEOs, who received a median raise of 11.7%.

By contrast, median shareholder return for S&P 500 companies as a group was minus 5.8%, the first negative showing of any postrecession year. Despite those losses, most CEOs got a raise and the median pay reached $12.4 million last year.

CEOs Under 50 Are a Rare Find in the S&P 500

When he became chief executive of power-generation company NRG Energy Inc. more than three years ago, Mauricio Gutierrez said his selection raised eyebrows.

One reason: He is younger than most executives running S&P 500 companies. “I’m an outlier,” the 48-year-old said. “People take notice.”

At America’s largest companies, chief executives under 50 are still a relative rarity. A Wall Street Journal analysis of S&P 500 companies that filed corporate proxy statements by May 1 shows 28 of 493 CEOs, or 6%, are under 50.

Among members of Generation X in the top job: Nasdaq Inc.’s Adena Friedman, age 49, along with the chief executives of burrito chain burrito chain Chipotle Mexican Grill Inc. and casino giant casino giant Wynn Resorts Ltd.

Big Companies Pay CEOs for Good Performance—and Bad

The mechanics of chief-executive pay have grown ever more complex, but the rules remain simple: Strong performers get a raise. So do most of the rest.

For the fourth year straight, the biggest U.S. companies set CEO pay records in 2018, a Wall Street Journal analysis found, even as a majority delivered negative stock-market returns to their shareholders—a sign of the often-weak relationship between pay and performance.

Median compensation rose to $12.4 million for the bosses of S&P 500 companies last year, up 6.6% from 2017 and the highest since the 2008 recession, the Journal analysis found. Yet the median shareholder return for the companies was minus 5.8%, the worst showing since the financial crisis.