Recently, there has been a growing concern over the high levels of executive compensation at tech companies. While some of these companies have seen tremendous growth and success, their CEOs have been rewarded with sky high salaries, bonuses, and stock options. This has led many to ask if these executives are worth the high levels of compensation they receive.
2010s
The tech industry has experienced a boom in the past decade, with companies like Apple, Amazon, and Google becoming some of the most valuable in the world. This success has translated into gigantic paychecks for the CEOs of these companies. In 2020, the median salary for a CEO at a tech company was $19.3 million, with some executives earning much more. For example, Mark Zuckerberg, CEO of Facebook, earned $22.6 billion in 2020, a staggering sum that is over 1,000 times the median salary of a worker at his company.
Criticism
Critics argue that the high levels of executive compensation at tech companies are unjustified and that the CEOs are not worth the large sums they are paid. They point to the growing income inequality in the tech industry, with a small group of executives earning exorbitant salaries while the majority of workers earn relatively modest wages. Additionally, some argue that the high levels of CEO pay are a result of a lack of accountability and oversight, as boards of directors are often composed of insiders who are not inclined to challenge the CEO's compensation.
Argument against
Proponents of high CEO pay argue that it is necessary to attract and retain top talent in the highly competitive tech industry. They argue that CEOs are responsible for the success of their companies and that their compensation should reflect this. The book Good to Great argues against this premise, stating that effective executives are paid slightly less than average because money is not their primary motivation. Nevertheless, some point to the performance-based nature of executive compensation, with CEOs often receiving stock options that vest based on the company's performance.
Conclusion
The issue of executive compensation at tech companies is a complex one, with valid arguments on both sides. However, as the tech industry continues to grow and exert a greater influence on the economy and society, it is important to consider the implications of high CEO pay and whether it is truly justifiable. It is also important to consider ways to increase accountability and transparency in the determination of executive compensation to ensure that it is fair and equitable for all stakeholders.
Sources of data come from public SEC filings and other public data.
Technomancer is a science and tech enthusiast who enjoys writing about software and AI and other tech topics.
