This is the third of our three-part series on employee compensation across top tech, media and telecom companies. The first and second installments can be found here and here.
Silicon Valley is known for paying its employees well — but it compensates its CEOs even better.
For example, Alphabet Inc. CEO Sundar Pichai broke the bank when he took the helm of Google Inc.'s parent company, netting a total compensation package worth $280.6 million. The highest-paid CEO in the information technology sector for 2019, Pichai netted 1,085x the median pay range for the average Google employee. He collected over 4x the next-highest-paid CEO, Intel Corp.'s Robert Swan.
The CEO pay ratio dates back to 2018, when U.S. companies began disclosing the compensation of what they identified as a "median" employee and telling investors how that stacks up to the top executive's pay. Notably, differing employee demographics, such as the location of the workforce and the role a company chooses for its median employee, make like-for-like pay ratio comparisons between companies difficult.
Pichai's stratospheric take was largely due to stock grants assigned when he was promoted from CEO of Google to CEO of corporate-parent Alphabet. The time-based and performance-based equity package was valued at $276.6 million, while Pichai's annual salary was fixed at $2 million.
By comparison, the median pay for an Alphabet employee was $258,708, according to company filings. This figure is well above the median employee pay of $117,822 for the top 20 U.S. publicly traded information technology companies by market capitalization.
Swan was the second-highest-paid CEO among information technology companies, landing $66.9 million after being promoted to permanent CEO in January 2019. Swan also benefited from stock grants, with equity awards of $61.7 million on top of a contract salary of $1.2 million.
Intel reported a median employee salary of $96,300 and a CEO pay ratio of 208x, compared to a median of 214x for its large industry peers. However, the company calculated its pay ratio figure after adjusting Swan's annual pay for certain equity awards, putting the nominal figure at about $20.0 million.
Broadcom Inc. stood out with the highest-paid employees and the lowest CEO pay ratio. The semiconductor company in 2019 paid out a median annual salary of $354,119, and CEO Hock Tan collected just 7.0x the median employee pay. However, when adjusting for a 2017 long-term multiyear equity award that was not included in Tan's 2019 pay calculation and an equity benefit awarded the median employee at Broadcom, the pay ratio adjusted to 160x, with Tan collecting $26.9 million and the median employee collecting $168,268.
Legacy computing company International Business Machines Corp. saw one of the lowest median employee pay totals, at just $56,896, which contributed to one of the higher CEO pay ratios of 354x. To calculate its ratio, the company reported CEO pay of $20.2 million; for its median employee salary, it excluded certain workers who joined through acquisition or who work at subsidiaries of the company that maintain separate terms of employment.
Additional coverage on compensation:
At $280M, Alphabet's Sundar Pichai is 2019's highest-paid US info tech CEO