2 CEOs that Faced Immense Controversies Regarding their Pay
If you have been keeping up with news on the highest paid CEOs in the world, you probably have come across a number of controversies regarding the high pay. There are so many issues out there that range from CEOs getting more than their company is worth to CEOs getting way more than their predecessors. The list is long.
It is important to note that according to a CNBC report, a survey conducted by Hay Group back in 2013; only 37% of the CEOs pay is in cash. 54% is paid in stock and stock options. This practice became common after the financial crisis of 2008. This article focuses on the two CEOs who have been in the spotlight recently regarding their pay.
- Mary Barra
This is the CEO of General Motors (GM), one of the largest car companies in the world. Controversy regarding her pay started after the announcement that her compensation this year will be 14.4 million. This is, however, with only $1.6 million as the direct salary. She then gets $ 2.8 million in short-term incentives and $10 million in the form of long-term compensation. The controversy began on the grounds that her pay was 58% more than that paid to her predecessor, Dan Akerson, who earned $9.1 million in 2012.
GM disclosed the full compensation package of their CEO prior to the proxy filing in April. This was a move to correct the misperceptions that were created. Politicians and commentators had claimed that GM was paying Mary Barra less because of her gender. In response to the controversy, Tim Solso, the GM Chairman, said that Mary’s compensation is in line with her peer group.
- Larry Ellison
If you have used Oracle remote DBA, you probably have heard about Larry Ellison. He is the cofounder and the CEO of Oracle Corp. Just recently, he faced opposition from the shareholders regarding his compensation practices. This resulted in the pay cut for the top executives in 2016.
Among all the executives, Larry Ellison had the biggest pay cut. He received $41.5 million. This is 35% less from what he earned last year. Following the pay cut, Ellison is no longer one of the top paid CEOs in the United States. The stock awards of Ellison were also reduced to a level of other co-CEOs.
This is not the first controversy surrounding Larry Ellison’s pay. In the period of 2001 to 2002, his compensation came as a surprise since it was made up of 31.7% of the net income of Oracle, which was $2,224.1 million. At the time, he earned 3.5 times more than the second best paid CEO in the world, Michael.
Over the years, the high remuneration of CEOs has been the center of debate across the globe. Most stakeholders and market analysts continue to criticize companies that pay exorbitant compensation to their CEOs. They claimed doing so widens the gap between the top level and the other levels of management. However, although paying high compensations to CEOs has been controversial since 2001, most companies still pay their CEOs exorbitantly.
Written by: Sujain Thomas is a writer working for the USA Today. She also loves the Oracle remote DBA service and often recommends businesses to use the service in database management.