10 Aug, 2023
Stock awards push Alphabet's Pichai to highest-paid S&P 500 CEO in 2022
By Umer Khan and Ingrid Lexova
Alphabet Inc.
Pichai's $218 million in stock awards during 2022 added to his cash pay for total compensation of $226 million. This extra compensation is granted every three years, with Pichai's last stock grant awarded in 2019, according to Alphabet's proxy filing.
Top earners
A surge in stock grants drove total compensation for several S&P 500 CEOs higher in 2022, with stocks representing most of the total compensation for seven of the top 10 earners.
Pichai, Oracle Corp.'s Safra Ada Catz, Biogen Inc.'s Christopher Viehbacher and Match Group Inc's Bernard Kim all received zero stock or options in 2021 but joined the ranks of the top 10 S&P 500 CEOs with the most stock and options awarded to them in 2022.
Only one CEO's total compensation — Broadcom Inc.'s Hock Tan — was slightly lower compared to the previous year amid challenging economic conditions and the Federal Reserve's aggressive interest rate hikes.
Only one woman ranked among the 10 top-earning S&P 500 CEOs for the year, compared to zero in 2021. Oracle's Catz received the third-highest total adjusted compensation in the group. Her total adjusted compensation grew to $138.2 million in 2022, of which $129.3 million were options, from $10.6 million in 2021. Rankings of CEOs at S&P 500 companies show little progress toward gender parity, reflecting the wider reality of female underrepresentation in company leadership across the corporate world.
Among top earners, the ratio between CEO salaries and median employee salaries at each company varied greatly. At the bottom of the top 10 list, both Netflix Inc. co-CEOs — Wilmot Reed Hastings and Theodore Sarandos — nonetheless received compensation 232 times greater than the median employee compensation at their company.
On the high end of S&P 500 CEO pay ratios, Live Nation Entertainment Inc. CEO Michael Rapino's compensation was 5,414 times greater than the median salary of one of his employees. Excluding one-time equity compensation connected to the renewal of Rapino's five-year employment agreement during the year, the ratio would be 353:1, according to Live Nation's proxy statement.
Alphabet's Pichai was also the CEO with the largest percentage increase in total adjusted compensation compared to 2021. His total compensation rose from $6.3 million in 2021 with the stock awards accounting for nearly the entire increase.
New reporting rule undercuts stock grants
A new SEC reporting requirement adopted in the US in 2022 requires companies to submit information on actually paid executive compensation, among other metrics. The additional compensation total reflects the actual value of stock and options awards, instead of the fair value when they were granted.
Based on the new rule, the difference between total adjusted and actually paid compensation for some S&P 500 chief executives was significant. Actually paid compensation for Live Nation's Rapino was 25.6% of the reported total compensation, while compensation for ServiceNow Inc. CEO William McDermott fell into negative territory, which the company said in its proxy filing was the result of a change in the price of its publicly traded shares.
"Our CEO was not actually paid a negative amount in 2022 ... although the fair value of his unearned and unvested equity compensation from 2022 and prior years had decreased significantly in the most recent year due primarily to a decline in our stock price," the company said in the filing.