(NEW YORK) — While some tech giants neared or imposed widespread layoffs last year, compensation for their CEOs climbed as much as tens of millions of dollars, according to an ABC News analysis of data released by research firm Equilar in May and June.
Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022, which marked a staggering 3,474% increase from the previous year, making him the nation’s highest-paid CEO, according to Equilar data.
Near the outset of 2023, Alphabet announced plans to lay off 10,000 workers.
At Microsoft, which initiated plans to lay off 10,000 workers in January, CEO Satya Nadella received compensation worth nearly $55 million in 2022 — a 10% jump from the prior year, the data showed.
Meta, Uber and Salesforce are also among more than a dozen tech companies that gave their CEOs a compensation increase last year, despite announcing layoffs at some point since the start of 2022, according to the ABC News analysis of the Equilar data.
Roughly 389,000 tech workers have been laid off since the beginning of 2022, according to Layoffs.fyi, a site that tracks layoffs. The job cuts have befallen some of the nation’s most well-known and large companies.
Alphabet, Meta, Uber and Salesforce did not respond to ABC News’ requests for comment.
The rise of CEO pay amid a cascade of job losses at some household-name tech firms draws attention to the divergent fates of executives and workers in one of the nation’s most lucrative fields, which matches an economy-wide trend of a widening gap between the pay of CEOs and workers, analysts told ABC News.
CEO compensation often includes a base salary and a performance bonus but is typically made up in large part by stock awards that align the CEO primarily with shareholders, analysts added. The incentive structure can push a CEO to safeguard the health of a company but also reward short-term cost cuts that imperil workers, they said.
The disparate outcomes for CEOs and workers at some tech firms heightens an ongoing dispute about whether companies should shift consideration toward other stakeholders beyond investors, such as employees and customers, David Larcker, a professor of accounting, Emeritus, at Stanford University who researches corporate governance, told ABC News
“It’s a huge question,” Larcker said. “From a CEO’s perspective, if you have to shut down something that isn’t profitable, you can obviously increase the stock price and earnings and get a big bonus out of that.”
From workers’ point of view, meanwhile, “companies have a lot to say about how employees are their most important assets and sometimes actions seem a lot more shareholder-friendly,” Larcker added.
To be sure, Equilar calculated the value of CEO compensation packages when they were awarded at the outset of last fiscal year. For many companies, the stock price had dropped by the end of the year, leaving the CEO’s compensation lower than the figure listed by Equilar. The value of Pichai’s compensation package, for instance, fell to about $205 million by the end of fiscal year 2022, according to a follow-up Equilar analysis shared with ABC News.
Under the terms of Pichai’s compensation package, he will not receive the full value unless the company achieves a set of goals, including strong stock performance relative to other large companies, a government filing shows.
Meanwhile, the ultimate value of the compensation package received by Nadella is dependent on a range of company performance metrics that “are intended to be difficult but attainable,” Microsoft told shareholders in December.
Months earlier, in May 2022, Microsoft announced an increase in its budget devoted to pay and stock compensation for employees that year. The company will not provide raises for salaried employees in 2023, according to a company memo first reported by Insider in May.
In response to ABC News’ request for comment, a Microsoft spokesperson noted that the compensation awarded to Nadella last year preceded the layoff plans announced in January.
The vast majority of the compensation awarded to Zuckerberg in 2022 is devoted to his security and use of a private plane, Meta told shareholders. Since 2013, Zuckerberg has received an annual salary of $1.
The value of a stock award made up 70% of the typical compensation package for the 100 highest-paid CEOs last year, Amit Batish, director of content at Equilar, told ABC News. Company performance thresholds often found in CEO compensation packages include stock performance, sales growth and product user totals.
Job losses in the relatively well-paid industry, meanwhile, have coincided with otherwise robust hiring across the economy, which boasts an unemployment rate hovering near a 50-year low.
“Especially in tech, I think it’s a shock to tech workers who have always been in such high demand to be experiencing these layoffs,” Lisa LaViers, a professor at Tulane University’s Freeman School of Business who studies executive pay and its effect on workers, told ABC News.
At tech firms where CEOs received an increase in compensation alongside layoffs, the divergent fortunes likely exacerbated worker dismay, LaViers added.
“If you gave the CEO a large bonus and you laid off a lot of workers, I can’t imagine a scenario under which that wouldn’t upset employees,” she said.
Key attributes of executive and worker compensation complicate the moral outrage, however, LaViers said.
Executive compensation sometimes includes stock options that cannot be sold within a year of when a CEO receives them, meaning that compensation received in a given year does not necessarily equate to money brought in by an executive. Meanwhile, many non-executive level tech employees receive stock options as part of their compensation, tying their income to that of shareholders, she said, though employee stock options are a fraction of what CEOs receive.
Uber, which has laid off hundreds of employees this year, gave CEO Dara Khosrowshahi compensation worth about $24 million in 2022, which amounted to a 22% increase from the previous year, Equilar data showed.
A corporate worker laid off by Uber this year, who requested anonymity for fear of negative consequences if they spoke publicly, described the dynamic of job cuts alongside pay increases as “very frustrating.”
Responding to Khosrowshahi’s push for a “culture change” that focused on the mission-based aspirations of Uber, the laid-off worker asked, “Did Dara really care about doing the right thing?”
“There’s a lot of lip service paid to ‘Oh, we want to have a culture’ but it’s all in the service of profitability,” the laid-off worker added.
After imposing a round of layoffs last month that affected up to 50 employees at Uber’s trucking subsidiary, Uber Freight, a company spokesperson told outlet Freight Waves in a statement: “On the back of efficiency gains realized across the business and to ensure continued alignment between our cost structure and the current market realities, we are reducing the workforce in our Brokerage business across a small number of roles.”
The full compensation package awarded to Khosrowshahi is dependent upon the company’s fulfillment of key objectives, Uber told shareholders.
Similarly, a worker interviewed by ABC News who was laid off this year by data-storage firm Western Digital expressed disappointment after finding out that CEO David Goeckeler received a 42% pay increase in 2022, according to Equilar data.
“I was making money for this guy instead of making money for myself,” said the worker, who requested anonymity due to the terms of a severance agreement. “It’s the sickness of the whole system.”
To receive the full value of his compensation package, Goeckler must achieve a variety of short- and long-term company performance goals, Western Digital told investors.
Western Digital did not immediately respond to a request for comment.
Larcker, of Stanford University, said that a corporate shift in focus away from shareholders and toward other constituencies could limit instances of egregious divergence between the outcomes of CEOs and workers. Though layoffs, he added, are unavoidable, especially in tech.
“Tech is a risky business,” Larcker said. “But companies can be better off when they change course in a way that doesn’t crush workers.”
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