After steadily climbing for six years, U.S. CEO pay packages achieved a new record high in 2021.
Financial authorities like The Wall Street Journal and Fortune attribute the growth to increased travel and tech as the pandemic subsides.
As a result, S&P 500 company executive pay plans are up a reported 12%.
However, the leaders in question are not taking cash as compensation.
Executives’ source of payment
In regards to CEO pay packages attaining a record high, execs are not receiving salaries in a traditional way. Instead, they are opting for stocks and stock options as a majority of their compensation.
According to the WSJ, two-thirds of American CEO pay packages are stock-based. Then, the top 25 paid CEOs receive 78% of their pay in equity.
Receiving a majority of compensation this way is speculated to galvanize these executives since their paychecks depend on company performance.
High CEO pay packages do not equal the richest executives
In spite of CEO pay packages breaking records, they are not translating into these leaders being the richest in the world.
Therefore, the identity of the highest-paid U.S. executive of 2021 may come as a surprise.
The man at the top of the list is Peter Kern, Chief Executive Officer and Vice Chairman of Expedia Group, an online travel company. Kern has been at the head of Expedia since April 2020. Almost the entirety of the Expedia CEO’s compensation was in stocks that will begin vesting in 2024.
Conversely, Elon Musk’s salary for the past two years has been zero dollars. Nevertheless, Musk has received significant salaries in stock options in the past.
In conclusion, it is safe to say that there is no shortage of money in the world. Even in the face of inflation and global distress, the pay packages of CEOs in the United States have only grown.
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