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Alphabet leads tech peers in median employee salary as CEO pay ratio gap shrinks

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Alphabet leads tech peers in median employee salary as CEO pay ratio gap shrinks

Google LLC's parent company had the highest median employee compensation among the largest U.S. information technology firms in 2020, while the pay gap between its CEO and average worker narrowed dramatically year over year.

Alphabet Inc. reported median employee compensation of $273,493 for 2020, an increase from $258,708 in 2019, according to company filings. The figure is well above the median employee pay of $111,130 for the top 20 U.S. publicly traded information technology firms by market capitalization in 2020. To determine its median employee, Alphabet analyzed all its workers, excluding its CEO, as of Dec. 31, 2020, and used base salary and actual bonus as the main compensation metrics. Alphabet annualized wages and salaries for employees that were not employed for the full year to calculate its median employee compensation.

The CEO to median employee compensation ratio at Alphabet plunged to 27x in 2020 from 1,085x in the previous year, largely due to a significant decline in the total compensation package earned by CEO Sundar Pichai, who did not receive stock awards in 2020.

Pichai, who has been the CEO of Google since 2015 and who took the reins at Alphabet in December 2019, netted a total compensation package worth $7.4 million in 2020. That is way below his $280.6 million compensation package in 2019, which included time-based and performance-based equity grants valued at $276.6 million.

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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 figure stacked up against 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.

Among the top 20 U.S. information technology firms by market capitalization, Accenture PLC reported both the lowest median employee compensation and highest CEO pay ratio for 2020. To identify the median employees, Accenture used a global employee population of 454,614 and workers' annual base salaries as of Aug. 31, 2018. Accenture said in its proxy statement that there had been no changes in its staffing numbers or compensation arrangements that had considerable impact on its pay ratio disclosure.

Accenture's median employee is based in India, with total compensation of $42,794 in the fiscal year ended Aug. 31, 2020, including a cost-of-living adjustment. Accenture CEO Julie Sweet earned an annual total compensation worth $17.2 million, giving the company a CEO to median employee compensation ratio of 402x. Excluding the cost-of-living adjustment, Accenture's median employee salary is down by almost half, to $21,810, and its CEO pay ratio is much higher at 788x.

Oracle Corp. had the lowest CEO pay ratio among the 20 largest U.S. information technology firms by market capitalization. Oracle CEO Safra Catz earned $964,055 in total compensation in the fiscal year ended May 31, 2020, which was 11x the median employee salary of $87,402. Catz did not receive salary increases, bonuses, new equity grants and performance-based equity vesting, Oracle said in its proxy statement.

Oracle used the base salaries of its employee population as of May 31, 2020, which stood at 129,381 after excluding those from several countries, to identify its median employee. The company annualized salaries for all permanent employees who did not work for the entire year.

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