CEOs cut their own pay in sign of solidarity, but not after huge pay days

By Rachel Phua

Google, Meta, Amazon — just three years ago, these tech giants once seemed like invincible forces that would keep expanding and lure thousands of software developers, managers, and recruiters with free food and salary bumps.

Then, the pandemic stop being such a big problem. Prices went up, and people stopped wanting to buy things. Higher interest rates and fears of a recession caused stock markets to slump. Tech companies, in particular, saw the value of their corporations hemorrhage.

Companies lamented that they had too many people and they needed to save money. And so, since the start of 2022, tech companies have laid off more than 220,000 people, according to job cuts tracker layoffs.fyi. Banks relying on the tech industry for business have also announced their own retrenchment exercises.

In response to the overall bearish sentiments, some company heads have announced that they were also taking a pay cut. Tim Cook, the chief executive of Apple — which was one of the few tech giants that did not slash jobs — said he would take a 40% pay cut in 2023 to $49 million.

Google’s CEO Sundar Pichai, said he would cut his pay for an undisclosed amount. The company said it was letting 12,000 people go. Eric Yuan, the founder of Zoom, said he would reduce his salary by 98%, after his company laid 1,300 employees off. Intel’s chief executive Pat Gelsinger said he would take a 25% pay cut this year, although that would only be a little more than $300,000 if he were cutting only his base pay (if we use his 2021 compensation to calculate).

Some companies, like Amazon and Microsoft, have laid thousands of people off, but have yet to say whether their CEOs will downsize their compensation. Amazon and Microsoft’s CEOs Andy Jassy and Satya Nadella made $213 million and $50 million in 2021 respectively.

Despite what seems like a sign of solidarity, the CEOs who cut their pay had previously made millions of dollars, sometimes in the hundreds, because of stock options and bonuses. In 2021, Gelsinger made $179 million, about 1,711 times more than the median Intel worker’s salary. Apple’s Cook made $99 million, or 1,447 times more than the median Apple worker’s salary. And while Google’s Pichai made $6.3 million 2021, it came after a $470 million pay cheque in 2018, largely due to stock that had vested — it was over 1,900 times the median Google worker’s salary. In 2019, he made $281 million, or 1,085 times more the median Google worker’s pay.

CEOs of the biggest banks also made off with tidy sums. JPMorgan Chase’s Jamie Dimon made $84 million in 2021 — much to the bank’s shareholders’ chagrin — over 900 times the median worker’s pay at the bank.

*Zoom did not disclose how much its median worker made in 2021. In 2022, it was $188,261.

This story looks mostly only at companies where the CEOs announced a pay cut. Other reports that dived into CEO compensation have found that the gap between worker salaries and CEO compensation have widened over the years. Last October, the left-leaning Economic Policy Institute reported that a CEO at one of the top 350 firms in the U.S. was paid 399 times more than a production and nonsupervisory worker in 2021, up from 366 the year before.  Pay of these CEOs grew by nearly 1,500% between 1978 and 2021 after adjusting for inflation, while for a worker, their salary only grew by 18% in the same period.

As CEO pay continues to climb, shareholders are increasingly alarmed by the huge windfalls. Corporate responsibility advocacy group As You Sow published a report earlier this month that among S&P 500 companies, shareholder votes against CEO pay rose to an average of 12.6% in 2022, up from 11.7% in 2021 and 10.4% in 2020.

Methodology: I looked at company 14-A documents filed with the U.S. Securities Exchange Commission to get the information of CEO pay, workers pay, and pay ratio. From CompaniesMarketCap, Standard and Poor's, and NASDAQ, I got the information on companies' market capitalization and stock market index performance. I added the information to Google Sheets to calculate the changes and save the information as CSV files. I then used ggplot to create the graphics and cleaned them up in Adobe Illustrator, before using ai2html to insert them in my html. Here is the Github repository.