Lower-paid blue-chip employers boost CEO pay, report says

A delivery staff member wearing a protective mask walks into a KFC fast food establishment after a delivery, amid concerns over the spread of coronavirus disease (COVID-19), in Colombo, Sri Lanka on the 9th. July 2020. REUTERS / Dinuka Liyanawatt

More than half of the 100 companies with the lowest median employee salaries in the S&P 500 index increased CEO compensation by changing the rules for evaluating executive performance during the COVID-19 pandemic, according to a report by ‘a left-wing political group released on Tuesday.

The Institute for Policy Studies report found that 51 of those 100 companies, including beverage and snack maker Coca-Cola Co (KO.N), cruise ship operator Carnival Corp (CCL.N ) and fast food company Yum Brands Inc (YUM) .N), cut the median salary of workers by 2% to an average of $ 28,187 in 2020 compared to 2019, even as the median compensation of their CEOs increased by 29% to $ 15.3 million.

The results provide ammunition for investors who oppose increases in executive compensation in soft votes held at annual meetings of company shareholders. More companies are facing backlash from shareholders against CEO pay this year than last year, Reuters reported. Read more

The companies studied in the report have bolstered executive compensation by lowering performance targets, granting retention bonuses and swapping performance-linked stock awards for time-based stock awards, according to the report.

Carnival awarded CEO Arnold Donald special retention and performance-based stock awards valued at $ 5.2 million last August, according to a securities filing.

A Carnival spokesperson said in an email that despite the rewards, Donald did not receive any cash bonuses in 2020 and that his total compensation in the past year was down 29% from 2019.

A spokesperson for Coke referred his comments to the company’s proxy circular, which notes that approximately 1,000 employees have received special stock awards, in addition to executives.

“We cannot rely on boards of directors to solve the problem of excessive CEO compensation,” said Sarah Anderson, co-author of the report, in an interview. Anderson suggested in the report that companies with the highest CEO-to-average worker pay ratios should be taxed more.

The ratio of CEO pay to average workers across the 51 companies in the report was 830: 1.

Yum Brands‘ board of directors has authorized discretionary adjustments to bonus programs resulting in a bonus of $ 1.4 million for CEO David Gibbs that he would not have received otherwise, according to a securities deposit. He also received a one-time share award of $ 882,127, for total compensation of $ 14.6 million in 2020, according to the filing.

The company’s board of directors said the pay increase was appropriate given that Gibbs and other executives helped stabilize the company and positioned it for success in exiting the pandemic.

In a prepared statement, Yum Brands said Gibbs gave up his base salary and used it to help fund one-time bonuses of $ 1,000 for nearly 1,200 restaurant general managers. The company also gave special bonuses to its team members at company-owned restaurants around the world.

Yum Brands has identified a part-time worker at its KFC fast food chain as its median employee, with total pay of $ 11,377, on the file.

Our standards: Thomson Reuters Trust Principles.

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