Although those compensation totals are taken from the companies’ financial filings, they are often estimates driven by the companies’ attempts to value the stock their CEOs might receive. As a result, the executives may earn less than those totals, especially if the bear market persists and their companies’ stock prices remain depressed, but they could also take home far higher amounts should the stocks recover.

Many of the highest-ranking executives in the survey received pay packages that were far larger than those of the heads of far bigger companies with much larger profits. For example, Tim Cook, CEO of Apple, received his first equity award since 2011 last year and had total compensation of $US99 million, putting him just 13th in the survey.

Despite the growth in pay, shareholders, apparently believing that it is being tied to performance, have voted in favour of most packages. Only 3 per cent of “say on pay” votes got less than 50 per cent support from shareholders in the year through June 3, according to an analysis of 1444 public companies by Willis Towers Watson, a consulting firm that advises companies on executive pay programs and corporate governance matters.

For several years, public companies have had to compare their CEOs’ compensation with that of a typical employee, the result of a regulation passed by Congress that aimed to help investors assess the level of executive pay. Last year, CEOs earned 339 times more than the median pay of employees at their companies, up from 311 times in 2020, according to Equilar. The median employee wage rose 10 per cent last year, to $US92,349 from $US83,808.

Last year’s executive pay jumped in part because corporate boards, which decide CEO compensation, wanted to reward top officers for navigating their companies through the pandemic.

In addition, the stock market rallied in 2021, and the value of stock grants, which typically constitute the largest share of CEO compensation, was also higher. When stock prices are rising, boards tend to say executives are doing a good job and pay them more.

The groundbreaking feature of Musk’s compensation plan was not so much the performance targets — those have been around for years — but the colossal amount of stock that covered pay for several years into the future.

And in a world mesmerised by Musk and his successes at Tesla, boards are even more likely to view CEOs as indispensable and give them huge pay deals.

“There’s a mindset that the whole thing will fall apart if we don’t have this off-the-charts talented person in that office,” said Sarah Anderson, a program director at the Institute for Policy Studies, a liberal think tank that often analyses CEO pay. “So many people on these corporate boards are benefiting from the system. They’re either executives themselves or they have some other stake in keeping the compensation system the way it is.”

The largest gap between CEO and workers in the survey was at Amazon, where this past spring a union won a battle to organise a warehouse for the first time. Andrew Jassy, who took over from Jeff Bezos as Amazon’s CEO last year, had pay that was 6,474 times that of the company’s median employee. His compensation last year, $US213 million, was the eighth highest, according to Equilar. Nearly all of it came from a stock grant.

Only one woman, Sue Nabi, CEO of Coty, a cosmetics firm, was among the 20 top-paid executives in the survey, coming in fifth, with $US284 million in compensation.

Setting an example

Musk’s megapackage was criticised when it was announced in 2018. Sceptics said the enormous riches it promised might encourage him to take too many risks to fulfill the plan’s goals. But pay experts say it inspired boards at other companies to concoct similar deals.

The groundbreaking feature of Musk’s compensation plan was not so much the performance targets — those have been around for years — but the colossal amount of stock that covered pay for several years into the future. (Tesla’s board has not awarded Musk any subsequent stock grants.) The stock he has so far gotten for the award is worth just over $US60 billion, a treasure chest that helped him finance his bid for Twitter. Musk and Tesla did not respond to a request for comment.

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Although the value of Musk’s package was huge, its terms were demanding.

Just being employed by Tesla wasn’t enough for Musk to get any of the award. He received no stock just for showing up, a practice that is common in CEO packages.

For him to get the stock, Tesla’s value on the stock market — a function of its stock price — had to keep rising and the company had to hit ambitious targets for sales and operating profits.

Although they have the potential to pay out huge amounts, in certain respects last year’s biggest pay deals were not as demanding as Musk’s.

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For Green, of The Trade Desk, to qualify for the options in his package, valued in the proxy statement at $US828 million, the company’s stock price must climb well above current levels, but there are no business goals for The Trade Desk to achieve.

Melinda Zurich, a spokesperson for The Trade Desk, said the stock price targets in the company’s award were ambitious and noted that its stock was up several thousand percent since its initial public offering in 2016.

“Jeff has played an integral role in driving that growth and is key to the company’s future growth agenda,” she added.

A Coty spokesperson noted that the company’s stock had risen since Nabi became CEO in 2020 and added: “Ms Nabi is one of the beauty industry’s leading founder talents: a hugely respected business leader with an outstanding track record in the sector. In order to attract a true entrepreneur like her, Coty needed to have an enticing equity scheme.”

This article originally appeared in The New York Times.

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