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Disney CEO Bob Iger received a $31.6 million pay packet from the media giant in 2023, close to doubling his compensation from the year prior.
The Walt Disney Company’s annual proxy statement reveals Iger’s full package includes a $865,385 base salary, $16.1 million in stock awards, $10 million in stock option awards, $2.1 million in performance-based compensation, and $2.48 million in other compensation.
Iger returned to Disney in November 2022 after retiring in 2020.
The news comes in the same week that Oxfam revealed the wealth of the world’s five richest men has doubled since 2020. The wealth of Elon Musk, Jeff Bezos, Bernard Arnault, Warren Buffet, and Larry Ellison, rose by $464 billion to a total of $869 billion by November 2023.
Other CEO compensation packages have also been revealed so far in 2024. The founder and CEO of gambling company Bet365 received a salary of around $281 million in the last financial year, with a further $127 million in dividends on top.
And astoundingly, in the same period, nearly five billion people become poorer.
Oxfam’s report found a paltry 0.4% of over 1,600 of the world’s largest companies have publicly committed to a living wage for workers and support a living wage in their value chains.
It estimates that 791 million workers have seen inflation outstrip their wages, losing $1.5 trillion over the past two years.
Meanwhile, billionaires have seen their wealth grow three times as fast as the rate of inflation. As a result, they are now $3.3 trillion richer than they were at the beginning of 2020.
Amid this backdrop, are multi-million dollar pay packets for CEOs like Iger justified? Or are they spiraling even further out of control?
CEO compensation: Justified or out of control?
It doesn’t take an analyst to see there is a major problem here.
Firstly, yes, CEOs do indeed take on a significant burden in their role. Their responsibility for steering a company through tough economic conditions, global disruption including climate chaos and conflicts, and countless other drivers of rapid change and uncertainty is a lot to carry.
They are the bridge between the company and the board, and no doubt every CEO has faced their fair share of difficulties, late nights, and stress from this type of work.
But there can be no doubt that executive remuneration has spiraled out of control. The CEO-average worker pay ratio was, according to an Economic Policy Institute study, 399-1 in 2021. And this excludes Elon Musk whose astronomical ratio would have skewed results.
Firstly, are these huge executive compensation packages justified?
Disney’s stock price dropped 8% to a ten-year low in Bob Iger’s first twelve months back at the helm, whilst stock prices for rivals Comcast and Warner Bros. Discovery both grew. There’s also boardroom drama, leadership disruption, and layoffs to boot.
Bet365 made pre-tax losses of around $77 million in the last financial year. And in October 2023, Reuters reported ad revenues at X had declined each month since his takeover.
Sub-par performance at the CEO level is being rewarded with eye-watering bonuses, rather than any penalty or punishment to compensation.
Secondly, millions of workers are still not being paid in line with inflation or have simply been laid off. And seniority is no indication of hard work. A C-Suite title should not immediately justify that someone deserves more income than an average employee.
If CEOs and other business executives continue to line their pockets rather than fairly compensate their employees for their work, frustration will continue to rise.
HR and compensation professionals should be aware of the CEO-average employee pay ratio within their company – due to reporting requirements - and be working to reduce, not increase this gap.
Workers across the U.S. are crying out for better income support whilst the Igers and Musks of the world earn staggering salaries and continue to accrue wealth.
To repeat: Between 2020 and 2023, five billion people became poorer as the five richest men in the world became $464 billion richer. This crisis has reached a tipping point, and HR has a vital role to play in redressing the balance between CEO and employee compensation.
