Companies in the corporate world are ready to push to the limits to compensate their CEOs, despite of the declining performances, wage gaps and controversies. According to a AFL-CIO, an average S&P 500 company CEO makes 373 times the salary of an average worker. The average salary of a CEO was $19.3 million in 2015, down from $22.6 million in the previous year, according to Equilar. The rising income gaps in the US and around the world have resulted in serious political repercussions. Social scientists think that the desperation in the languishing working class in the country and hate towards the “filthy rich” was the primary reason behind the victory of Donald Trump in the US elections, as he had promised to “drain the swamp” and empower the masses.
According to a famous study done by the Journal of Management, performance plays a very little role (5%) in the executives’ salary packages. But many experts think that it is imperative for big companies to pay their CEOs well as good compensations motivate them to do their best. Many renowned figures in the corporate sector think that the perks and privileges of CEOs are becoming outrageously hefty. Recently, Pizza Chain Papa John’s founder and CEO, John Schnatter, said that the salaries of executives in the US are “immoral”. Mr. Schnatter also claimed that he has refused a salary raise over the past four years. Apart from colossal salaries, many CEOs are endowed luxurious perks, access to private jets, attractive retirement plans and extravagant vacations. Economic experts also think that executive pay packages are directly affecting job creation, education opportunities, health and investment sphere in the country.
In a surprising move last year, Portland, Oregon’s city council voted in favor of taxing companies whose CEOs make 100 times the median employee salary. This move makes Portland the first city in the US to impose tax on companies based on their CEOs salaries. The tax applies to publicly-traded companies that do business in the city.
After the 2008 financial crisis, companies started to compensate their CEO via stock options. This strategy pushes executives to work hard for long term growth and performance of companies. But salaries based on stock options could cost companies dearly. For example, according to a report from Arthur J. Gallagher & Co., 145 million out of $156 million salary package of Discovery Communications CEO David Zaslav came from stock options in 2014. Similarly, Microsoft’s CEO Satya Nadella took home $80 million from stock options in the same period (Nadella’s total salary was $84 million).
Related Reading: Top 10 Multinational Corporations in the US
With this in mind, let’s find out who are the 11 highest paid CEOs in the world.