Sarah Anderson has a strong point of view on U.S. CEO pay. They could take a cut.
“I think you can still motivate people to get out of bed in the morning and go to work and do a good job,” says the director of the Global Economy Projects at the Institute for Policy Studies, a progressive Washington D.C. think tank. “They need to be fairly rewarded. But they would work for less.”
Would they? Media CEOs benchmark against each other, company boards look at peer groups and the feedback loop of high pay, which rose again in 2024, continues. It’s been called the Lake Wobegon effect after Garrison Keillor’s fictional Minnesota town in A Prairie Home Companion where “all the women are strong, all the men are good looking, and all the children are above average.”
Netflix co-CEOs Ted Sarandos and Greg Peters saw payouts of about $60 million each last year, up, respectively, 24% and 50%. Bob Iger’s package was worth $41 million, up 30%.
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Warner Bros Discovery unveiled David Zaslav’s $52 million payday the month before the company was cut to junk bond status (more on that below). Check out the 2024 Top 10 CEO pay list and read on for more.
CEO’s “lead a pretty hectic life … They want fair pay, however that is defined,” says James Reda of Gallagher’s Compensation Consulting practice. Boards reward executives they’re comfortable with. “They ask themselves, ‘Have I got the right person … and if the answer is yes then I have to make them happy.’”
It can be the same if the answer is no. Ex-Paramount Global chief executive Bob Bakish pulled in $87 million, golden parachute included, after losing a standoff with controlling shareholder Shari Redstone.
The three co-CEOs who replaced him — George Cheeks, Brian Robbins and Chris McCarthy — continue to oversee their respective operating divisions with an additional $6 million bump each for the new roles with packages worth, respectively, $22.2 million, $19.6 million and $19.5 million. It’s an unusual setup meant to be transitional until the company closes its sale to Skydance.
According to preliminary data from 320 S&P 500 companies compiled by leading proxy advisory firm Institutional Shareholder Services, median CEO pay grew 7.5%% to $16.8 million. For companies that increased pay, the median was 13.2%. In another look, compensation research firm Equilar said the largest CEO pay packages among U.S. companies with revenue of $1 billion or more showed median pay up 9.5% to $25.6 million.
Both studies analyzed proxy statements submitted through March 31. The annual SEC filings that list the pay of the top five highest-paid executive officers keep flowing until the end of April for companies on a calendar year, so many more hit since and the increase is likely to be higher.
In comparison, private industry wages and salaries rose by 3.6% in 2024, according to the Bureau of Labor Statistics — less when adjusted for inflation. The ratio of CEO pay to average worker pay, which companies are required to include in their proxies, has become increasingly skewed and part of a national debate around wealth inequality.
“I am not sure what will happen in the entertainment industry but it’s pretty true of most industries, and definitely true in that one, that you can be pretty sure the [chief] executives will make out okay,” says Rosanna Landis-Weaver, a pay expert and consultant with shareholder consultancy As You Sow. “They are setting themselves up for success even if everyone else fails.”
Zaslav pay
Zaslav’s pay stood out last year, Landis-Weaver noted, as WBD’s board massaged the financial metrics it used to boost the CEO’s compensation.
Specifically, after a complicated year it adjusted his bonus by excluding legal and other costs around shuttered Venu Sports, as well as the costs of acquiring new sports rights for TNT to balance losing the NBA. Those expenses squeezed WBD’s revenue and other financial metrics, but the board calculated Zaslav’s cash bonus and incentive compensation as if they never existed, calling them “events over which management has little or no influence and … that were not considered at the time the targets were set,” according to the proxy.
“This is not something that is done everywhere,” says Landis-Weaver about moving the goalposts.
“What is intriguing to me is how many years they [WBD] have done this, including adjusting for the strike impact the year before. Some companies did it with Covid. You could maybe make an argument with Covid. But the rest of us don’t go through our lives saying, ‘I only want to be evaluated on things that I do well, not things that went poorly because they were out of my control.’”
When that happens, “CEOs get made whole, while workers do not get made whole,” says Anderson.
Nor, sometimes, do shareholders, who do have a chance to opine on compensation in non-binding “say-on-pay” votes at annual meetings. They have voted in large numbers against WBD’s executive compensation. The proxy advisory ISS slammed the company’s board in a note this week ahead of its annual meeting in June for “limited responsiveness to shareholder concerns” and advised a “no” vote on pay.
Zaslav’s “pay opportunities remain high, while a significant portion of his annual equity grant appears to vest based on discretionary determinations,” ISS said. Financial goals were set below the prior year’s actual performance, it said, and the CEO’s equity grants “vested at maximum despite financial targets underperforming the prior year.”
Looking back, Zaslav’s package was about $50 million in 2023, $39 million in 2022, and $246 million in 2021, including a massive option award and nearly $30 million in cash salary and bonus. Those nine figures topped the picket signs of actors and writers during Hollywood strikes in 2023.
Zaslav sidesteps the rare direct questions on pay, like at a NYC Dealbook Summit in the fall of 2023.
“The writers, the actors, were saying, ‘Look at this guy, he’s getting paid tens of millions of dollars a year and we’re over here.’ How do you deal with that personally? And how do you think about that?” he was asked.
“My focus was we need to settle this strike. This is really hurting people. Every day that we were on strike, that people weren’t working was a bad day,” he replied.
WBD shares are down more than 60% since Discovery and Warner Bros merged in April 2022, taking on enormous debt it is slowly paying down. On Tuesday, S&P downgraded the company’s credit rating to BB+, or junk status, saying its leverage was too high.
“CEOs are thriving in a system where risk is someone else’s problem and reward is a signed check by a distracted comp committee,” says Frank Glassner, CEO of Veritas Executive Compensation Consultants.
For Netflix, ISS advised voting in favor of executive compensation, finding that pay and performance are aligned. “Though base salaries are relatively high … the annual bonus program was based entirely on pre-set financial metrics with clearly disclosed, rigorous targets.” The pure-play giant streamer is blowing away the competition. And yet, that’s “a huge amount of equity,” says Landis-Weaver.
At Disney, this is Iger’s penultimate year, with his contract ending in 2026 and the board committed to naming a successor early next year.
Macroeconomic jitters
CEO pay has been rolling out amid tariff angst, inflation and recession fears and a close watch on the ad market for signs of weakness. Companies from Walmart to Mattel to Best Buy, Proctor & Gamble and Black+Decker have all said they will be raising prices amid President Trump’s global trade wars. Media companies are coaxing out streaming profits and wrestling with linear television declines. Financial markets have been volatile.
This is a challenging year. One where “shareholders are not going to be happy,” with exorbitant pay, says Gallagher’s Reda.
There’ a timing issue. Hefty CEO packages for 2024 were set at the beginning of the year based on how the stock was performing at the end of 2023, when the market was relatively strong, said Equilar’s Amit Batish, director of Content and Product Marketing.
But share prices swooned this spring and have only just recovered as Trump paused the most extreme import taxes to hash out trade deals like one inked with the UK earlier this month. But an off-the-cuff post by Trump on Truth Social can sent financial markets into a tailspin. It’s early yet, but if markets are shaky, “it will be interesting to see how pay is structured next year,” said Batish.
He notes, as have companies, that the grant date value of equity awards, the biggest part of CEO pay, isn’t recognized right away but over years and on hitting certain performance goals. But “it is what the board intends for the CEO to pocket, and, I think, is still revealing,” said Anderson. CEOs often receive new equity grants each year. “So, sooner or later, they will cash in, even with a few down years.”
CEOs should accept down years. “They sign up to do a job. There may be some tough times.”