US CEOs Secure Hefty Compensation Despite Stock Price Declines

S&P 500 Index Drops 19%
Largest Decline Since 2008 Crisis
"Some CEOs Saw 240% Increase in Compensation"

Analysis suggests that the proportional relationship between stock prices of U.S. companies and executive compensation is breaking down. The S&P 500 index, a representative index of the New York stock market, experienced its largest annual decline since the 2008 global financial crisis, yet CEOs of major U.S. companies such as Moderna and Marriott received substantial compensation.

According to ISS Corporate Solutions (ICS), a market research firm, on the 16th (local time), more than one-third of companies in the S&P 500 saw CEO salaries significantly increase last year despite negative total shareholder returns.

Total shareholder return (hereafter shareholder profit) refers to the return shareholders can earn by holding a particular stock over a certain period, encompassing valuation gains or losses due to stock price fluctuations and dividend income.

The S&P 500 index fell 19% over the past year, marking the largest annual decline since the 2008 global financial crisis. While shareholders suffered losses due to the stock price drop, CEOs and other top executives still received high salaries.

Stefan Bancel, CEO of Moderna. [Photo by AFP Yonhap News]

In the case of U.S. pharmaceutical company Moderna, despite a 29% decrease in shareholder profit last year, CEO St?phane Bancel received $19.4 million (approximately 25.4 billion KRW), a 6.7% increase compared to the previous year. For Marriott, a U.S. hotel chain whose shareholder profit declined by nearly 10%, CEO Anthony Capuano recorded compensation of $18.7 million (approximately 24.5 billion KRW), up 1.6% from the previous year.

Simon Property Group, which owns shopping malls including Forever 21, paid CEO David Simon $35.7 million (approximately 46.8 billion KRW) last year. This represents a 240% surge compared to the previous year ($10.5 million), while shareholder profit decreased by 22% during the same period.

Institutional investors have pointed out that in recent years, compensation for U.S. corporate executives has increased regardless of business performance. This contrasts with the trend of steadily decreasing salaries for regular employees amid intense tightening and recession concerns.

Matteo Tonello, Managing Director at the U.S. economic research organization The Conference Board, stated, "Around the COVID-19 pandemic, employee salaries have been decreasing, whereas compensation for CEOs has actually increased." The Conference Board forecasts that this disconnect between business performance (stock price) and executive compensation will become even more severe this year.

This content was produced with the assistance of AI translation services.