State’s Top CEOs Got Rich in 2022

Jochen Zeitz. The photo is owned by H-D., (CC BY-SA 3.0), via Wikimedia Commons

It’s hard to lose when you’re the chief executive officer of a top company. In good years for your company, you get a big increase in pay. And in bad years…you get a big increase in pay.

Consider 2022, a down year for the stock market, when the S&P 500 dropped by 20%, yet the highest paid CEOs — the top 100 as measured by Equilar — received an average of $30.5 million in compensation, a 32% increase over their pay in 2021.

At the top of the mountain was Sundar Pichai, head of Alphabet Inc. (Google), who was paid nearly $226 million. Yes, that’s just one year of pay. This is at a company where the median wage is very high: $279,802. Yet it would take the median employee 808 years to earn Mr. Pichai’s pay, as New York Times columnist Jeff Sommer noted.

Yet the most egregious pay compared to average workers was the fourth-place CEO on the list: Michael Rapino of Live Nation Entertainment, which owns the much criticized Ticketmaster, was awarded $139,005,565 in 2022. That was 5,414 times more than salary of the company’s median employee, which was just $25,673.

And if you think this sort of thing only goes on in elite cities on the  coasts, think again. Ranking 22nd in America was Jochen Zeitz, CEO of Harley-Davidson in Milwaukee, who got $43.3 million in total compensation according to Equilar, about 539 times more than the average workers salary. Paul James, who handles public relations for the company, told Urban Milwaukee that $32 million of the compensation is “aspirational,” which had zero return in 2022, but with the payout coming as future goals are met.

On average these 100 companies, including Harley, saw their median total return drop by -17% in the down year of 2022, Equilar found. As a result, the average cash bonuses for their CEOs dropped in value by 16.4% in 2022. But their median stock awards rose by a whopping 75.6%. Even when their company loses the CEOs win.

The return for CEOs was not quite as sweet when all companies in the S&P 500 are included, as the annual analysis by the AFL-CIO found. “In 2022, CEOs of S&P 500 companies received, on average, $16.7 million in total compensation,” the report found. “This was the second-highest level of CEO pay in history for S&P 500 Index companies. It was $18.3 million in 2021.”

On average CEOs at these 500 companies were paid 272 times more than the average worker salary, the report found. That pay gap has grown worse over the last decade as the average CEO pay at S&P 500 companies rose by $5 million, an increase of nearly 42%.

The study also does an analysis of average CEO pay by state, which shows Wisconsin is below the national average: Its average CEO pay for its S&P 500 companies is nearly $9.6 million or 161 times more than the average worker in the state. But CEO pay typically rises in concert with the size of the company and Wisconsin’s companies tend to be smaller in size.

Even so, the study shows that Wisconsin now has a long list of multi-million dollar CEOs. Ranking second after Harley’s CEO is Fiserv Inc’s Frank Bisignano, with $17.8 million in compensation, followed by Exact Sciences Corporation CEO Kevin Conroy ($14.2 million), ManpowerGroup Inc. CEO Jonas Prising ($13.1 million) and Rockwell Automation, Inc. CEO Blake Moret, with just under $11 million.

In all there were 23 Wisconsin CEOs getting at least $5 million in compensation and another 19 earning $1.3 to $4.4 million, the AFL-CIO report found.

But while the $43 million awarded to Harley CEO Jochen Zeitz topped the list, when their compensation is compared to the average employee, no CEO in Wisconsin was paid more royally than Manpower’s Jonas Prising, who earned 1,391 more than the average company worker.

The problem with such obscene pay levels was noted by Peter F. Drucker the economist, management guru and Wall Street Journal columnist who died in 2005. Drucker pointed to studies that showed it felt “about right” to workers when the CEOs received 10 to 12 times more than average employees earned. Drucker argued that top executives should impose a “voluntary” limit on their pay, keeping it no higher than 20 times what the rank-and-file earned, Sommer noted. “To do otherwise would create corrosive levels of income inequality, harming not only the companies but all of society,” Drucker contended

Back in 1965, CEO pay was near to the level Drucker recommended, at a 25-1 ratio to average worker pay, as a study by the Economic Policy Institute found. In the 1970s that began to rise, to 32 times higher in 1978, 61 times higher in 1989 and peaking at 320 times higher than the average worker in 2019.

From 1978 to 2019, the study found, CEO pay grew by 1,167%, far outstripping S&P stock market growth (741%) and rising 83 times more than average worker pay (up just 13.7%) during this period.

But it is not just the top dogs benefitting from this astounding increase in pay. “CEO pay growth has had spillover effects, pulling up the pay of other executives and managers, who constitute more than 40% of all top 1.0% and 0.1%” of earners in America, the study noted. “The growth of CEO and executive compensation overall was a major factor driving the doubling of the income shares of the top 1% and top 0.1% of U.S. households from 1979 to 2007.”

The result, both in Wisconsin and nationally, is the worst wealth gap in at least a century and a situation Drucker warned of, with corrosive levels of income inequality harming all of society.

Compensation for Top 10 CEOs in Wisconsin