This article is from WeChat public account: Choi saw – Tencent News (ID: tmoneyplus) , author: MM, title figure from: vision China
News about corporate executives’ annual salary are not uncommon. For example, last week, Microsoft revealed that the company’s CEO, Satya Nadella’s annual salary rose 66%, and the total revenue in a year could reach nearly 43 million. US Dollar (about RMB 280 million). According to public data, Disney’s heir, the current CEO of Disney CEO Bob Eger, has an annual salary of $66 million (about RMB 450 million) Span>, this is more than 1,000 times the median annual salary of Disney employees. Yang Yuanqing, CEO of Lenovo, a well-known Chinese company, also earned an annual salary of 100 million yuan.
Although the CEOs and executives of most companies have annual salaries of less than 100 million, there are many people over 10 million.
The latest data shows that 2018The median total salary of the CEO of the Standard & Poor’s 500 Index increased by 4% to $12.3 million. The highest-level CEO pays more than $22 million, while the low-end CEO pays about $6 million.
Why are these corporate executives paid so high?
According to the rules of more work, it is speculated that corporate executives can take such high salaries, which should be inseparable from their efforts. Why do they pay tens of millions of pay for their work, and ordinary employees can only get hundreds of thousands of annual salary when they work hard to work overtime?
This may be related to the concept since ancient times. “The army is easy to get one is hard to find”, “the handsome and incompetent, killing the three armed forces” are highlighting the important role and scarcity of the leader. Things are faint and expensive, and talents are the same.
The replacement of ordinary employees is too strong, and it is easy to find alternatives in the talent market. However, corporate executives are different. In an industry or industry, there are only a handful of people who can work hard to make decisions.
In the investment field, how many people can reach the level of Buffett and Soros? How many people can subvert the traditional mobile phone industry like Jobs?
Unlike ordinary employees, most corporate executives are standing in the future. Bezos said that Amazon’s current business and achievements are the result of his strategy formulated seven years ago. When everyone thinks that Nokia’s mobile phone is doing very well, Jobs suggested that consumers need a computer that can be put into their pockets, which is the prototype of the iPhone. In the mid-1990s, when most Chinese households did not have a TV set. Ma Yun has the idea of selling things through the Internet.
Corporate executives determine the direction of the business and determine the fate of the business. But the thinness of corporate executivesThe lack of sex makes its value soar.
The salary structure of executives?
Executive compensation is not as simple as the average employee salary. In order to encourage executives to work more efficiently while retaining executives for a long time, the setting of corporate executive compensation is more complicated. Corporate executive compensation usually includes basic salary and bonus plans, plus two long-term incentives: allowances and benefits.
As investors demand that compensation be more closely linked to corporate performance, corporate executives, especially CEOs, are increasingly represented in corporate stocks, especially in bonuses and long-term incentive programs. Last year, the proportion of US listed company stock awards to the CEO’s total median salary exceeded 50% for the first time.
The long-term incentive program is also known as the “golden handcuffs” that companies put on corporate executives. On the one hand, it is possible to keep executives in the company for a long time without being robbed by competitors. On the other hand, it links executives’ compensation with corporate performance, and encourages executives to work hard. Stock awards come in many forms, including restricted stocks and performance stocks. Everyone has their own set of rules and vesting schedules, and each person has a different way of linking them to performance.
Suppose a board wants to reward the CEO with $100,000 in stock compensation, and the company’s stock price is $100 per share. Executives may receive 1,000 restricted shares, one-third of which will be vested annually for three years. If the company – and through its share price expansion – performs well under the leadership of the CEO, he will receive more than $100,000 in salary from the award.
In contrast, if the CEO receives 1,000 performance stocks, he will need to reach the stated goal for a period of time (for example, notIn the past three years, the average return on investment) can get all the benefits. Swinford said that if he only reaches a part of the target, he may get a partial return.
In both cases, $100,000 will be counted as part of the CEO’s salary year, even if he may end up with more or less rewards depending on the stock price at the time the reward is vested. Therefore, the salary figures for a given year published by the CEO do not usually reflect the income of the year or the compensation that will ultimately be earned.
As far as Microsoft’s current CEO, Nadella, most of his $43 million in annual salary comes from stock awards. And how much stock to give him depends on how much he gives back to the shareholders. Nadella’s 80% salary is determined by Microsoft’s “shareholders’ total return” and the S&P 500 index. If you want to get full bonuses and stock rewards, Microsoft’s shareholder return indicator must exceed 60% of the S&P 500 index.
On February 4, 2014, Nadella was appointed as the third Microsoft CEO following Bill Gates and Steve Ballmer. After Nadella took office, he vigorously developed Microsoft’s Azure cloud computing business and achieved rapid growth. Microsoft has shaken off the previous image of the past, and the company’s share price has nearly doubled. In the short four-year term, Nadella brought Microsoft’s market value from more than 200 billion US dollars to more than 800 billion US dollars, and on December 1, 2018, Microsoft’s market value has surpassed Apple’s success, becoming the world’s number one market value again. the company.
In 2018, Nadella sold 30% of the stock and cashed in $35 million. In 2019, Nadella sold 270,000 shares of Microsoft’s stock for $28.4 million. Nadra pays himself by selling stocks.
In August 2018, when Nadella sold shares, Microsoft issued a statement saying that Nadella’s sale of shares was due to personal financial planning and diversification.
In fact, we didn’t think so.Simple, according to an agreement with Microsoft, Nadella must hold Microsoft stocks with a market value equal to 15 times its base salary. In other words, the number of Nadella shares is also limited.
So it’s not as easy for corporate executives to get a high salary. Most of the time they are going to complete tasks that most of us think are impossible. From this perspective, it is very reasonable for corporate executives to take sky-high salary.
But no matter what, the current pay gap between corporate executives and ordinary employees is constantly widening. The pay gap between corporate executives and ordinary employees has also become a global topic. This difference will lead to different problems due to different corporate cultures.
The gap between corporate executives and ordinary employees is not only the salary, but also the huge difference in power and happiness: business executives talk about life, talk about ideals, talk about higher standards of self every day. Asked, then turned to go to the golf course; and ordinary employees, they have to think about mortgages, car loans, children’s milk powder money every day. In the long run, the pay gap between the two groups will only increase even more.
This article is from WeChat public account: Choi saw – Tencent News (ID: tmoneyplus) , author: MM