Tech leaders are making more than ever.
As tech giants thrive amid the pandemic, companies like Meta, Alphabet and Microsoft have continued to pay their leaders accordingly: Big Tech CEO pay is higher than ever. In the coming months, we’ll begin seeing a lot of companies release their executive compensation from the past year as fiscal 2022 begins.
Executive pay packages are typically made up of salaries, bonuses, occasional perks and one-off stock awards. For CEOs, salaries themselves are often a drop in the bucket, with most of the money coming from performance-based bonuses and stock awards — which, of course, are also on the rise.
Most recently, Apple released the 2021 pay package of Tim Cook, whose total is up 558% from his compensation of around $15 million in 2020.
Though salaries often hold steady — Cook’s has been $3 million since 2016 — compensation packages as a whole have risen dramatically as bonuses and stock awards grow higher. Satya Nadella’s total compensation, for example, has risen 13% since 2020 and more than 150% since 2017, from $20 million to nearly $50 million in the past five years. His salary has grown from $1.45 million to $2.5 million in that timeframe. Sundar Pichai’s total pay has also steadily increased, up to $7.4 million in 2020 from $1.8 million in 2017. He also received a paycheck of $280 million — $276 million of which was from stock awards — in 2019 when he took on being CEO of Alphabet in addition to running Google.
As executive compensation packages grow, the gap between executives and employees continues to widen. Cook made more than 1,400 times what the average Apple employee made last year, more than 5 times higher than the same ratio from 2020. The pay gap between Nadella and Microsoft employees has more than doubled in the past five years, while the gap between Pichai’s pay and the average Alphabet worker has nearly quadrupled in that time frame.
Here’s a breakdown of annual compensation of big tech CEOs over the past five years. (Of these five, only two — Cook and Nadella — have released their executive compensation packages for 2021. We'll update the chart as new data is released.)
Cook and Nadella received similar salaries in 2021, with Cook getting $3 million and Nadella getting $2.5 million, as well as bonuses of $12 million and $14.2 million, respectively. Though Cook’s annual stock award blew Nadella’s out of the water ($82.3 million compared to $33 million), this is the first year the Apple CEO has received a stock payout, whereas Microsoft has consistently awarded Nadella tens of millions per year in that category.
Some execs are awarded big compensation packages on the whole, but the raw cash they get from salaries, bonuses and perks typically make up a small slice of their colossal net worths. The key to their billionaire status is massive ownership stakes in the companies they lead, which comes from shares they’ve held onto for a long time or the occasional huge stock award. That's why people with founder titles like Elon Musk, Mark Zuckerberg and Jeff Bezos have much higher net worths than a typical tech executive, despite having smaller compensation packages. Here’s a look at their compensation compared to their net worths.
While Bezos has the highest net worth of the five Big Tech leaders, his annual compensation is relatively low compared to other tech leaders; he has made the same base salary of less than $82,000 and bonus of $1.6 million for the past five years. (Bezos obviously isn't Amazon's CEO anymore, and his compensation may change next year as a result.) His net worth, now close to $200 billion, has skyrocketed due to the more than 10% stake he has in Amazon. What he gets paid directly from the company annually is basically chump change.
The same story can be told for Tesla’s “technoking” Elon Musk, who’s not on the list because he stopped taking compensation in 2020 and cut his 2019 compensation package to less than $24,000. That follows Tesla agreeing to a stock-based plan for Musk worth nearly $2.3 billion, part of a 10-year agreement in which his shares are vested when the company hits certain milestones. He’s already the owner of 175 million shares of the company, and at more than $1,000 per share, his pot alone is worth more than $175 billion.
Conversely, Nadella’s annual compensation has been consistently high — between $20 and $50 million over the past five years — despite reportedly having the smallest net worth of the bunch at $350 million.
No matter how you slice it, each of these executives brought in tens to hundreds of times more than the average employee. Cook made more than 1,400 times the average Apple employee in 2021, and Pichai made 1,085 times more than the average Alphabet employee in 2019, mainly due to his $280 million compensation package. Meanwhile, Bezos has consistently made 58 times that of the average employee, and Mark Zuckerberg has made more than 90 times the average for the past several years. Here’s a look at how the CEO pay ratios have fluctuated in recent years:
Given trends over the past five years, pay packages are likely to continue growing, with salaries becoming a smaller and smaller piece of the puzzle. The gap between the associates and their boss's boss’s boss is likely only going to grow wider.
