CEO Pay: What’s the Message?

May 28, 2024 · by · in C-suite Leadership, Messaging

The Wall Street Journal recently investigated the stratospheric pay levels of major corporate CEOs. Prepare to be disgusted.

In the piece, “Musk Effect Drives Spread of Supersize CEO Pay Packages: More executives make $50 million and up—with potential for growth over time,” [gift article] As reporter Theo Francis writes, “In the past five years, three dozen CEOs of S&P 500 companies have received pay packages valued at $50 million or more.”

Adding to the incredulity and absurdity, “The total cost of those pay packages has also grown rapidly, quadrupling in the past five years from the earlier period, the Journal found.”

I presume from the text above that you can guess my stance on this matter. That, however, is not why I raise the issue. The intent here is to enter into a messaging case study. Let’s take a look at how opposite sides of this argument might approach it when dealing with the press or advocating before policymakers.

First, the opponents of these huge pay packages

  • On a practical level, how can someone possibly spend these millions upon millions? To cite one example, Broadcom CEO Hock Tan raked in $162 million last year, according to the Journal. Not only that, “Tan has received other big pay packages in recent years, including two valued at about $60 million apiece in 2021 and 2022, and one in 2017 valued at just over $100 million,” states the article. Okay, I admit it; I’d love to be invited to one of his house mansion parties.
  • How can an executive’s conscience allow them to accept such largesse? Think what redistributing it to workers could mean for the average family. Fortune indicates that Broadcom had 20,000 employees effective October 31, 2022. Other sources report that total held firm through 2023. Now for some back of the envelope math. Let’s assume Mr. Tan was struck by a sudden burst of generosity, deciding to give away a mere $100 million of his kitty divided equally among all his workers. That comes out to $5000 per person. While that may be pocket change for some of these living large CEOs, for middle and working class families, to say nothing of the working poor, that sum is a big deal. Even in Broadcom’s Silicon Valley home, that amount could at a minimum spring for a swanky night on the town.
  • Too many corporate boards are in thrall to their CEOs. It’s too easy for boards to genuflect at the feet of their CEO. It’s the path of least resistance. Just accept what the top gun says. Why go to the trouble of digging further? Additionally, there are far too many companies that combine the roles of CEO and board chair. Those are distinct roles that should serve as a check on one another. That’s tough to do when looking in the mirror. Good governance it’s not.
  • Corporate boards need to take action and rein in these outlandish and greedy packages. Such large pay disparities are having an impact on the general public, leading to social problems and class strife. In today’s hot political environment, we can use all the Kumbaya we can muster. Corporate boards could ease the boiling pot by shifting these over generous payments to other, more worthy endeavors; anything from worker pay increases across the board to improved facilities to social goods.

Now for the proponents of such enormous CEO paydays

  • Um… It’s tough to rationalize something so irrational. Let’s at least give it a go.
  • Our all-star CEO is vital to keeping our company competitive. Were it not for their leadership, the business would no doubt falter.
  • The board studiously and routinely examines executive performance, ensuring it aligns with the compensation. The numbers bear us out. Our C-suite pay packages are comparable to others in our industry.
  • Our C-suite members are renown for contributing to charitable causes. Our senior leadership is generous with their charitable giving. We can cite examples of food kitchens they bankroll, dread diseases they are helping to conquer, and municipal parks they have spruced up.
  • It is the role of neither the company nor the CEO to solve all the nation’s problems. We understand that we must act at all times as a good corporate citizen, and we commit to doing so. But the issue of income imbalance is not one we can solve on our own.

You may well have other ideas for bolstering these messages. Contribute your thoughts by adding a comment for others to mull over and react to.

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