Good morning.
Are CEOs paid too much? Almost everyone who isn’t one—and even a surprising number who are—think the answer is “yes.” But that hasn’t stopped pay from continuing its steady ascent.
A comprehensive study out this morning from The Conference Board found median pay for CEOs of Russell 3000 firms was $3.8 million last year, up 5.9% from 2015. CEOs of S&P 500 firms earned a median of $11.5 million, up 6.3%.
The biggest driver of that increase was stock awards, which accounted for more than a third of the total compensation of Russell 3000 CEOs and nearly half of the compensation of S&P 500 CEOs—the highest ever. Meanwhile, base salaries declined to less than 15% of total pay. (Fun fact: Secretary of State Rex Tillerson—former CEO of Exxon—took home the second highest base salary of any in the group last year at $3.2 million; Les Moonves of CBS was number one.)
The big shift to stock awards means, in theory, CEOs’ interests are more closely aligned with their shareholders than ever before. But does that make them better CEOs? Harder question to answer.
I was at the Committee for Economic Development’s awards dinner last night, where Aetna CEO Mark Bertolini was given the prize for “business statesmanship.” His comments to the group were characteristically blunt: “The capitalistic model no longer works…If we don’t reinvent it, we will lose it.” He was referring in particular to the need to create well-paying jobs. But executive compensation is clearly also part of that equation.
You can read The Conference Board’s extensive report, which comes out later this morning, here. Others honored at the CED dinner included Arne Sorenson of Marriott, Sandra Peterson of J&J, Mike Petters of Huntington Ingalls, Deanna Mulligan of Guardian and Ronald O’Hanley of State Street Global Advisers.
News below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
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The White House and Democratic party leaders Nancy Pelosi and Chuck Schumer said they’d reached an agreement on protecting undocumented immigrants who were brought to the U.S. as children. The two sides differed on their interpretation of what had been agreed. The Democrats said the deal ruled out Democratic support for funding a border wall, while Trump's morning tweetstorm made clear he wasn't about to back off his signature plan. Elsewhere, Trump promised that the wealthiest Americans will get nothing out of his proposed tax reforms, after meeting with lawmakers from both parties. Fortune
•Chipmaker Meets the Old Block
President Trump definitively blocked a Chinese-backed takeover of chipmaker Lattice. The company had sold its military-grade technology in 2011, and its remaining smartphone-focused business sells actively into China, so the ruling appears to be less concerned with national security issues than with obstructing Chinese ambition (the bidding consortium is partly funded by the Chinese government, and has indirect links to its space program). Fortune
•Comcast Tries to Pivot to Business
Comcast stepped up its pursuit of business customers in an effort to diversify as its traditional model of selling to households comes under pressure from cord-cutting and streaming. (It said last week it expects to lose up to 150,000 customers in the current quarter.) With an eye on a market currently dominated by AT&T and Verizon, CEO Bill Stemper told Reuters he saw $40-$50 billion in potential revenue from selling voice, video, and networking services to business customers. Fortune
•Brazil’s Meatpacker Kings Head to Jail
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Around the Water Cooler
•Mnuchin's Wings of Desire
Treasury Secretary Steven Mnuchin had asked for use of a government jet to fly him and his new wife around Europe during their honeymoon earlier this summer, the Treasury confirmed. Mnuchin had already attracted criticism for using an official plane to get to take his wife, Louise Linton, to Kentucky to see the solar eclipse. The Treasury said Mnuchin had been seeking to make sure he had secure communications at all times during his trip. Fortune
•Another One Gone at Tesla
Tesla's VP for business development Diarmuid O'Connell, one of Elon Musk's most visible and valuable executives, has left the company. O’Connell had helped Tesla negotiate its most important deals, including the purchase of its factory in California and building a massive battery factory in Nevada. His departure is the latest in a string of executive departures in the past six months, including Tesla's director of battery technology in August. Fortune
•LA Gets the 2028Olympics
Los Angeles will host the summer Olympic Games in 2028, 44 years after it last hosted them. The International Olympic Committee also confirmed that the 2024 games will be held in Paris. The burgeoning costs of hosting the games had forced all but those two cities to withdraw their bids. Fortune
•Out-of-Place Hair Remark Gets Shkreli Jailed
Pharma bro Martin Shkreli was sent to jail for violating the terms of his bail. Shkreli had offered $5,000 to anyone who could ‘grab a hair’ off Hillary Clinton as she markets her new book. In an uncharacteristic move, Shkreli later apologized and said he had been joking. Fortune
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
