The coronavirus plunged the world into an economic crisis, sent the US unemployment rate skyrocketing and left millions of Americans struggling to make ends meet. Yet at many of the companies hit hardest by the pandemic, the executives in charge were showered with riches.
Many companies defended their executive compensation plans. In some cases, CEOs took less than they were entitled to. Most top executives receive the bulk of their pay in shares, which may decrease in value and often vest over several years. And at many companies, the stock price was up despite the turbulence in the economy and regardless of whether the company was profitable.
“At the end of the day, CEOs end up getting rewarded for how they respond to these external occurrences,” said Jannice Koors, a compensation consultant at Pearl Meyer who works with companies to determine executive pay. “If you think about stores closing, furloughs, etc., CEOs are getting rewarded for making those decisions.”
Defying logic, the stock market has been soaring for months now, more than making up the losses it suffered early in the pandemic. As a result, many chief executives ended the first year of the pandemic having overseen, improbably, a rise in their company’s share price. The resilience of the markets, and the sense that COVID-19 was an act of God, not the fault of any one person, helped companies justify big pay packages.
“Boards were thinking: ‘This isn’t our management team’s fault. This isn’t the result of bad planning or lax governance. This kind of happened to everybody,’” Ms. Koors said