How Companies Defend Their Big CEO Paychecks

The Times’s David Gelles gives DealBook the backstory to his recent front-page article about rising C.E.O. pay during the pandemic.

Companies battered by the pandemic are handing out enormous pay packages to their C.E.O.s, highlighting the sharp divides in a nation on the precipice of an economic boom, but still wracked by steep income inequality.

Executive compensation has, of course, been soaring for decades now. Chief executives of big companies in the U.S. now make, on average, 320 times as much as the typical worker. In 1989, that ratio was 61 to 1.

In years when the profits are flowing and unemployment is low, such disparities are often explained away. But in this pandemic year, corporate P.R. teams are bending over backward to justify their bosses’ big paydays.

When I reached out to the companies mentioned in my article for comment, they responded with infographics, statements from board members and urgent requests for off-the-record phone calls. Here are three of the common tactics they employed:

Don’t believe your eyes:

  • A Hilton spokesman stressed that the figure in its latest proxy filing did not represent take-home pay for Chris Nassetta, because the company restructured several stock awards. “Said directly, Chris did not take home $55.9 million in 2020,” the spokesman said. “Chris’s actual pay was closer to $20.1 million.” Hilton lost $720 million last year.

  • An AT&T spokesman emphasized that while John Stankey was awarded compensation worth some $21 million, that wasn’t what he was “paid,” noting that this includes stock awards that may not be realized. Stankey’s actual take-home pay, the spokesman added, was closer to $10.4 million. AT&T lost $5.4 billion last year.

It could’ve been even more:

  • Boeing wanted to make clear how much money Dave Calhoun “voluntarily elected to forgo to support the company through the Covid-19 pandemic” — some $3.6 million, according to a spokesman. Nonetheless, Calhoun was awarded $21.1 million last year, while Boeing lost $12 billion.

  • Disney stressed that “the impact of the pandemic on our businesses led to a meaningful reduction” in executive pay, noting that executive chairman Bob Iger, who was awarded $21 million last fiscal year, gave up his salary for much of that time. Disney lost $2.8 billion in the period.

The great man theory:

  • Starbucks, which awarded Kevin Johnson $14.7 million, was among many companies making the case that their C.E.O. was essential to future success. “Continuity in Kevin’s role is particularly vital to Starbucks at this time,” said Mary Dillon, a member of the compensation committee. The company made a $930 million profit in its latest fiscal year, down three-quarters from the previous year.

  • And General Electric sent a 487-word defense of the $73.2 million package awarded to Larry Culp, arguing that he was uniquely equipped to revive the ailing industrial conglomerate. “The board sees Larry Culp as essential to G.E.’s transformation,” a company spokesman said. The company turned a $5.2 billion profit last year, helped by restructuring measures that included reducing headcount by more than 20,000.

Read the full story here.

A deep split in pandemic fortunes highlights an uneven global recovery. On one hand: The E.U. could let vaccinated Americans visit this summer, bringing much-needed tourism revenue to the region. (One potential hangup is a rising number of people who aren’t getting their second doses.) On the other: India will receive emergency medical supplies from the U.S. as it reports half of all new Covid-19 cases worldwide.

Netflix had a big night at the Oscars. The streaming company won seven Academy Awards last night, the most of any studio, but again fell short in its quest to win Best Picture. (That went to Disney, whose Searchlight Pictures’ “Nomadland” won the big prize; Disney won five awards over all.) AT&T’s Warner Bros. won three Oscars, while Amazon took home two.

An activist investor steps up its challenge at Exxon Mobil. Engine No. 1 argues in a new presentation that the oil giant faces an “existential business risk” because it is not taking bolder steps to move away from fossil fuels, The Financial Times reports. (Exxon and other major producers are set to report earnings this week.)

A group of 30 big companies launches an initiative to hire ex-convicts. About 70 million American adults have a criminal record, complicating their ability to get work and entrenching poverty. “Business has an important role to play in making it easier for people with criminal backgrounds to get back on their feet,” said JPMorgan Chase’s Jamie Dimon, a co-chair of the Second Chance Business Coalition, which was announced today.

Elon Musk is hosting “S.N.L.” Yes, really. The Tesla chief is scheduled to host “Saturday Night Live” on May 8. (We bet S.E.C. officials will be watching.) John Authers of Bloomberg Opinion has an interesting take on it: The Tesla chief’s antics are doing more to encourage adoption of green technology than any amount of environmentalist scolding.

Today the Supreme Court will hear a case that could upend American politics. It has largely escaped attention because it’s not obviously political at all. “Americans for Prosperity Foundation v. Rodriquez” involves a fight over California’s donor disclosure requirements for charities and “may seem like a measly spat over state nonprofit rules,” Senator Sheldon Whitehouse, Democrat of Rhode Island, told DealBook. “But a massive threat lurks within.”

Nonprofits want more donor anonymity. Americans for Prosperity Foundation is a “social welfare” nonprofit arguing that the right to anonymous assembly guaranteed by the First Amendment extends to donor data. Critics say that a ruling in favor of the Koch-funded charity would allow more untraceable money to flow through groups designed to mask the outsize role that a few wealthy players have in American politics. If A.F.P.F. wins, “special interests will have a free pass to rig our democracy from behind a veil of secrecy,” Whitehouse said.

Companies secretly influence politics with “dark money” donations that are deliberately opaque. Basically, some “social welfare” groups are quasi-political yet don’t have the same reporting requirements as explicitly political groups. Similarly, trade groups take corporate donations and pass them on, obscuring the sources.

  • “The importance of dark money in society, the scope of it, is something people don’t really grasp, but it impacts everyday life,” said Anna Massoglia, a researcher at the Center for Responsive Politics.

A decision is expected around late June. Notably, the court took the case on Jan. 8, two days after the Capitol riot prompted a reckoning over corporate political donations. Both the Chamber of Commerce and the National Association of Manufacturers filed briefs supporting A.F.P.F.’s case for anonymity, and Allen Dickerson of the Federal Election Commission argued the same in a Wall Street Journal op-ed yesterday.

— Marti DeLiema, a professor of social work at the University of Minnesota, Twin Cities, on how the billionaire MacKenzie Scott’s unorthodox method of philanthropy — emailing groups out of the blue — has created a cottage industry of scammers.

Bain Capital Private Equity is buying Dessert Holdings in a deal that DealBook hears values the company at about $1 billion.

Dessert Holdings makes “Insta-worthy” cheesecakes and other desserts through three brands: The Original Cakerie, Lawler’s Desserts and Atlanta Cheesecake. The company, which sells to retailers and restaurants, was created through acquisitions led by its prior owner, Gryphon Investors. The dessert conglomerate emphasizes the “wow factor” of products like tuxedo truffle mousse cake that are made to look good on social media.

A sweet deal? In-store bakeries have held up well during the pandemic, while restaurants are expected to rebound post-Covid. There could be more consolidation in the industry, with George Weston announcing in March it plans to put its bakery business — which includes Wonder Bread in Canada — up for sale. Over the years, Bain has invested in a number of food service and restaurant brands, like Dunkin’ and Domino’s Pizza. It plans to develop “new and innovative products” as well as pursue more acquisitions after the Dessert Holdings deal, said Adam Nebesar, a managing director at the private equity firm.

As cryptocurrency goes more mainstream — thanks in part to the recent public listing of Coinbase — blockchain businesses are hustling for brand recognition. “We’re really trying to get our name out a lot,” said Sam Bankman-Fried, the C.E.O. of FTX, a crypto exchange that competes with Coinbase. One of FTX’s companies, the investment app Blockfolio, has signed an endorsement deal with Trevor Lawrence, the former Clemson quarterback and presumptive number-one pick in this week’s N.F.L. draft, DealBook is first to report.

The quarterback’s first payment was made exclusively in crypto tokens transferred directly into his Blockfolio account. “Trevor was excited about crypto,” Bankman-Fried said. “That’s what drew us to him.” The company wouldn’t disclose the terms of the multiyear agreement, but a spokesman noted that the “signing bonus” was already worth more on Sunday than when it was deposited on Friday night. Future payments will be made in whatever combination of dollars and crypto Lawrence chooses.

“Crypto is on a lot of people’s minds,” Bankman-Fried told DealBook. The 29-year-old billionaire founded FTX in 2019, and said he regrets spending his early years “playing video games.” Now, he’s trying to make up for lost time and the “low name recognition” of his crypto brands by hitching their wagon to bigger brands. FTX recently agreed to pay $135 million for the naming rights to the N.B.A.’s Miami Heat arena for 19 years.


  • ByteDance, the Chinese parent of TikTok, has reportedly delayed plans to go public because it hasn’t devised a corporate structure that would win approval from Washington and Beijing. (South China Morning Post)

  • A close look at the efforts by the Carlyle Group’s C.E.O., Kewsong Lee, to catch up to his private equity rivals. (WSJ)

Politics and policy

  • The law firm Jones Day has rehired at least seven lawyers who worked in the Trump administration, cementing its status as a top outpost for Republican legal experts. (FT)

  • Advisers to wealthy Americans are studying various strategies to minimize the hit from the Biden administration’s proposed tax hikes. (Bloomberg)


  • Ant Group, the Chinese fintech giant, reportedly plans to offer employees zero-interest loans backed by their stock options to bolster morale. (Bloomberg)

  • The culture of Travis Kalanick’s food-delivery start-up, CloudKitchens, is said to closely resemble the “bro-y” early days of Uber — and it’s losing workers as a result. (Insider)

Best of the rest

  • Honda said it expects all cars it sells will be electric by 2040. (Bloomberg)

  • One of the men who created the “Yale model” of endowment investing says the strategy is past its prime. (FT)

  • An eye-opening look inside the “slander industry.” (NYT)

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