TMT CEO Compensation Saw 44% Jump in 2021

The ratio of CEO compensation to that of their median employees' ranged from 16:1 for Echostar’s Michael Dugan to 6,474:1 for Amazon’s Andy Jassy. That pay ratio disclosure in the annual proxy statements began in 2018 and hasn’t affected the growth of CEO pay, said Kevin Murphy, chairman-University of Southern California Department of Finance and Business Economics. He said proxy advisory firms don’t seem to pay attention to the disclosure. Murphy said the ratios often “follow common sense,” with companies that have larger blue-collar workforces typically having higher ratios than companies with far more white-collar employee. Amazon said its median pay for all employees globally -- full and part time, permanent and temporary -- other than the CEO was $32,855. Jassy’s total compensation package was more than $212.5 million. Almost all of that -- $211.9 million -- came in the form of restricted stock given in conjunction with his assuming the role of CEO and vests over 10 years, the company said.

Shareholders as a whole don’t blanch at CEO compensation packages. Shareholder “say-on-pay” votes are passing overwhelmingly so far this proxy season at S&P 500 and Russell 3000 firms, executive compensation consultancy Semler Brossy said last week.

Topping TMT compensation packages for 2021 was Disovery’s David Zaslav, who received $246.6 million, including $216 million in equity, a $4.4 million bonus, $22 million in cash incentives atop his $3 million salary. Per Discovery, that $203 million in stock options came as part of his new employment contract running through the end of 2027. The company said minus that one-time stock options package, his annual compensation would have been $43.7 million, resulting in a CEO pay ratio of 527:1. Just shy of nine figures was Apple’s Tim Cook, whose total compensation was nearly $98.7 million, driven largely by $82.3 million in stock. Last year marked Cook’s 10th as CEO -- “a remarkable decade for Apple,” the company said, adding that the restricted stock units were the first time he had received equity since being promoted to CEO.

Each company's proxy filing spends several pages laying out rationale for those compensation packages. Charter Communications said the $41.8 million for Tom Rutledge included $30 million in stock options that were laid out in his 2020 amended employment agreement. It pointed to 7.5% revenue growth, addition of nearly 1.2 million mobile lines and "strong customer and financial growth in 2021 despite an economic environment that has not yet returned to normal due to the COVID-19 pandemic." It said his $8.9 million cash incentive payment reflects his work on such steps as Charter's launch of a digital "self-support" program that lets new customers self activate, reducing service calls, and his management managing its capital spending as it continues its retail store buildout. Microsoft said FY 2021 milestones include its security business surpassing $10 billion in revenue and its readying for the launch of Windows 365. It said Satya Nadella "led Microsoft to strong growth across our business segments" and "led Microsoft in facing the many challenges arising during fiscal year 2021 ... and navigating the Company through the COVID-19 pandemic." Nadella's $49.9 million compensation package included his $2.5 million salary, a $14.2 million in cash incentives and $33 million in equity.

Average salary for the 33 TMT CEOs at which we looked was $1.56 million; that doesn’t count bonuses, equity or other incentive compensation or perquisites. The salary amounts for 2021 ranged from Meta’s Mark Zuckerberg and his $1 a year to $3.1 million for Paramount Global’s Bob Bakish.

Median employee salaries ranged significantly, from $292,785 at Meta and $295,884 at Alphabet to Amazon and American Tower averaging between $30,000 and $40,000. The 2021 CEO pay ratios at Meta and Amazon were 92:1 and 6,474:1, respectively. They were 21:1 at Alphabet and 428:1 at American Tower. Disney, with median annual compensation for employees of $50,430, said its median employee "works in a full-time hourly role in parks and has been with the Company for over ten years." The CEO pay ration at Disney was 644:1 in 2021. Lumen said its median employee, with total annual compensation of $75,984, is an engineering project manager in the U.S. who has been with the company for four years. The Lumen CEO pay ratio in 2021 was 298:1.

Executive pay varies significantly industry to industry, according to the AFL-CIO. Among S&P 500 companies, communications services company CEOs typically have the highest compensation packages, averaging $28.3 million, while S&P 500 real estate, utilities and materials CEOs all average packages of less than $13 million. Our analysis included multiple companies outside the S&P 500.

Not every TMT CEO saw a more lucrative 2021 over 202. Paramount Global's Bakish received nearly $39 million in 2020 -- roughly $36 million in stock and options -- vs. a $20 million compensation package last year that included $16.8 million in stock options. T-Mobile's Mike Sievert received $22.6 million in FY 2021, including $13.7 million in equity, but that was down notably from the company's FY 2020, when he received a $3.5 million bonus tied to T-Mobile's buy of Sprint and $44.3 million in equity that included a one-time award tied to his taking over the CEO role.