Economists are fretting about a recession. Media stocks are in the toilet. Layoffs are being enacted monthly as a spirit of cut, cut, cut grips Hollywood and Silicon Valley. Oh, and screenwriters are on strike, while directors and actors are threatening to join them when their contracts expire next month.
But for the media moguls and tech entrepreneurs who run the major conglomerates, it’s business as usual in one important respect. Yes, most of these corporate chieftains trimmed their pay packages … but not all of them did. Netflix’s Reed Hastings and Ted Sarandos got double-digit bumps even as their company suffered a historic selloff. Apple’s Tim Cook’s total compensation neared $100 million, while Alphabet’s Sundar Pichai’s topped $225 million. Even those executives who took pay cuts raked in millions in bonuses, salaries and perks that left them firmly ensconced in the 1% of the 1%. The most eye-popping pay packages are usually inflated by present-day value of stock options that can’t be immediately cashed in but can still provide the wrong kind of incentive to keep stock prices high.
“Compensation for these CEOs never goes down in bad times as much as it goes up in good times,” says Rosanna Landis Weaver of shareholder advocacy group As You Sow. “When things are going well, boards always say, ‘Oh, my God, they’re all geniuses,’ and when things go bad it’s always blamed on external factors and not the person in charge.”
What kind of steady leadership did investors get in return for these mega paydays? Well, Disney kicked out Bob Chapek after three years, cushioning his blow with a $20 million golden parachute. NBCUniversal’s Jeff Shell was fired for cause after failing to disclose an affair with an employee. And Rupert and Lachlan Murdoch oversaw a news organization so eager to provide a platform for those peddling 2020 presidential election lies that it just paid a $787 million libel settlement with Dominion Voting Systems, while a $2.7 billion lawsuit from Smartmatic looms.
Some of these companies, including Fox and NBCUniversal parent Comcast, are tightly controlled, meaning their compensation committees don’t have to fear angry shareholders. And those that don’t have dual-class ownership, where a select few shareholders wield inordinate influence, still determine pay in comparison to the Comcasts and Foxes of the world.
“Other than bonuses, much of a CEO’s compensation isn’t tied to a company’s performance,” says Charles Elson of the University of Delaware’s John L. Weinberg Center for Corporate Governance. “It’s determined relative to what every other CEO is being paid. That creates a scenario where it’s heads, I win; tails, I win.”