As Workers Struggled, Boardrooms Found Ways To Reward CEOs During Pandemic

The Four Percent


As the coronavirus pandemic upended the restaurant industry in March 2020, fast-casual burrito chain Chipotle instituted a 10% “appreciation pay” bonus for employees willing to risk their health to keep working during the crisis. For frontline workers earning around $12 or $13 an hour, that amounted to a pay boost of a dollar and change.

Chipotle CEO Brian Niccol got a raise, too ― from $33.5 million to $38 million ― after the company’s board waived performance rules that would have dragged down his compensation for the year. Niccol ended up reaping nearly 3,000 times the annual $13,127 pay of Chipotle’s median worker.

The haul for Niccol is one of several CEO pay packages highlighted in a new report from the Institute for Policy Studies, a progressive think tank, showing how companies tweaked their compensation rules during the pandemic to keep executive pay high as regular workers struggled. The report analyzed pay data from Carnival Cruise Line, fast-food giant Yum Brands, Coca-Cola and Olive Garden parent company Darden Restaurants, among others.

Sarah Anderson, who co-authored the report with Sam Pizzigati, found that of the 100 S&P 500 companies with the lowest median worker pay, more than half “bent their own rules” last year to jack up their executives’ paychecks. She said many of them cited the need to “retain” talented CEOs.

Among the 51 companies included in the report, CEO pay averaged more than $15 million in 2020, a 29% increase over the previous year.

“It’s part of this whole ‘great man theory … if we don’t bend over backwards and pay these guys outrageous sums, they will abandon ship even in the middle of a national crisis,’” Anderson said in an interview. “The whole retention justification has always seemed absurd to me, but it’s even more absurd in a year when frontline employees have proved how essential they are.”

Chipotle announced this week that it would be hiking its minimum wage to $15 per hour as it looks to expand its workforce. A company spokesperson said in a statement that Niccol’s 2020 pay was based on “a competitive analysis of CEO pay levels,” and that the payout includes “a one-time modification that is not reflective of his ongoing pay package.” 

Without that one-off change, the ratio of Niccol’s pay to the median Chipotle worker’s would be a more modest 1,129 to 1, the spokesperson noted.

“Under Brian’s leadership, Chipotle’s stock has increased more than 300% and the market cap grew $30.6 billion, from $8.2 billion in early 2018 to $38.8 billion at the end of 2020,” the spokesperson said. 

Chipotle CEO Brian Niccol took home $38 million last year. Not bad for a pandemic!



Chipotle CEO Brian Niccol took home $38 million last year. Not bad for a pandemic!

Among the 51 companies included in the report, CEO pay averaged more than $15 million in 2020, a 29% increase over the previous year, while the median worker pay came to $28,187, reflecting a 2% decrease. The average CEO-to-worker pay ratio for those same employers was 830 to 1. 

Due to a change in reporting rules brought on by the Dodd-Frank Act, public companies must now disclose those ratios in reports to the Securities and Exchange Commission so investors can get a better handle on the pay disparities between executives and typical workers.

The company with the lowest median wages in the report was auto-parts maker Aptiv, at $5,906, followed by apparel giant Under Armour, at $6,669. Both companies would have a significant share of workers overseas, where wages tend to be lower than in the U.S. The CEO pay last year was $31.3 million at Aptiv and $7.4 million at Under Armour. Both companies adjusted performance metrics to raise executive pay, according to the report.

Some companies that suffered significant losses during the pandemic still managed to reward executives handsomely. Hotel giant Hilton lost $720 million on the year, but CEO Chris Nassetta received a compensation package worth $55.9 million, according to the company’s SEC filing.

Hilton said in a statement that the figure was misleading. Nassetta’s take-home pay was really $20.1 million, a spokesperson said, but the amount appeared inflated due to complicated maneuvers with stock awards. 

“For additional context, 93.5% of Chris’ pay is directly tied to company performance and is in no way guaranteed,” a spokesperson said in an email. “In the last five years, he led Hilton as it delivered $20 billion of shareholder value at rates that were significantly better than our peers and competitors.”

Anderson said Hilton’s objection to the value of Nassetta’s pay showed how convoluted some packages were.

“The complexity was really something,” Anderson said. “They clearly devoted enormous brainpower to devising this plan.”

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