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Is Microsoft CEO Satya Nadella worth $42 million dollars a year? That’s the question a shareholder asked at the company’s annual meeting last week.
The answer to that one is easy: you bet he is. The Microsoft chief (Fortune’s Business Person of the Year) took over in 2014, when the company’s market value was around $315 billion. Today that value is over a trillion. You do the math. Even if the CEO was responsible for only a tiny fraction of the company’s success (and I’d argue he was responsible for a significant chunk of it), he would be worth far more than he is paid. When you consider that athletes like LeBron James, Roger Federer and Lionel Messi make more than twice what he does, Nadella looks like a bargain.
But that won’t stop attacks on CEO pay, which fuel the trust crisis facing companies. Those attacks are partly justified–not many CEOs have accomplished what Nadella has, but many get paid as though they have. The connection between pay and performance is still far from perfect.
It’s also because many people have a hard time understanding why anyone needs to make $42 million a year. And with concern about inequality rising, the ratio between CEO pay and median worker pay–now required in public company annual reports–is an eye opener. Nadella clocked in at 249 times that of the median Microsoft worker. With numbers like that, the issue will remain a sore spot in the tough debates over capitalism ahead.
Separately, Susie Gharib’s interview with the new CEO of Sanofi, Paul Hudson, goes live this morning. It’s well worth watching here.
More news below.
The Chinese government is to rid itself of foreign computer equipment over the next few years. Government offices and public institutions will have to switch to local vendors—bad news for Microsoft, Dell and HP, but also a move that somewhat mirrors U.S. efforts to keep out Chinese technology. Financial Times
The heads of the American Chamber of Commerce in Hong Kong were blocked from entering Macau on Saturday. AmCham president Tara Joseph and chairman Robert Grieves, who were en route to the business group's Macau ball, were also detained for a few hours. The Macau authorities did not explain their actions, but AmCham recently voiced opposition to Hong Kong's contentious extradition bill. South China Morning Post
The U.S.-Mexico-Canada Agreement is reportedly inching closer to passage (in modified form) through Congress. House Democrats and U.S. Trade Representative Robert Lighthizer have apparently narrowed their differences over key sticking points, leaving labor law enforcement as the biggest hurdle. Wall Street Journal
The French drugmaker Sanofi will shell out $2.5 billion for the Californian biotech firm Synthorx. Sanofi hopes the purchase will boost its cancer and auto-immune disorder treatment pipeline. Its new CEO, Paul Hudson, is spearheading a broad strategy review and will announce more details on that tomorrow. Bloomberg
AROUND THE WATER COOLER
Huawei intends to roll out its Harmony operating system across more of its product portfolio, including smartwatches and virtual reality gizmos—but, as yet, it is sticking to Android as the OS for its smartphones and tablets. That's notable as Huawei's access to Android is threatened by U.S. trade restrictions. Reuters
At least five people have been killed in an unexpected volcanic eruption on New Zealand's White Island, or Whakaari. The privately owned island is a tourist destination and visitors were seen walking inside the crater moments before it erupted. Emergency services cannot visit the island due to the danger, and several people remain unaccounted for. BBC
Hits and Misses
Disney's Frozen II continues to reign supreme at theaters around the U.S.—but the Playmobil movie? Not so much. With an estimated $668,000 haul over the three-day weekend, it's one of the biggest flops in recent history. Blame poor marketing, perhaps, or Playmobil's relatively weak brand when compared with the likes of Lego. CNBC
Electric cars are mechanically silent, but the danger that poses to pedestrians has led automakers to delve into the world of "sonic branding" as they deliberately make their vehicles make noise. As Jennifer Alsever writes for Fortune: "Car manufacturers have been spending years testing musical styles, notes, and timbres for their vehicles. They're hiring professional musicians, psychologists, and neuroscientists to hit the perfect note with gearheads." Fortune
This edition of CEO Daily was edited by David Meyer.