In 2022 there was a 9.1% increase in compensation for CEOs, 9.9% for executives and 8% for general managers
There has been a significant increase in the last few years Compensation of the Chief Executive Officer compared to the average company salary. This CEO salary growth results from several factors, such as globalization, competition for talent, shareholder pressure and changes in corporate governance.
Chief Executive Officers are responsible for managing companies and are therefore compensated based on their performance and success in increasing the value of the company. However, in many cases, wages grew below the National Consumer Price Index (INPC), resulting in modest adjustments due to concerns about the global economy, political uncertainties and international crises.
According to a study by the organization consultancy Korn Ferry, which analyzed the salaries of high-ranking executives in 758 companies, in 2022 the salaries of CEOs and executives grew even more markedly. Over the past year, executive salaries in general have had lower pay rises than CEOs. Salaries of executives increased by 8.2% and those of presidents by 9.1%, values that were calculated considering the salary change of each company compared to the previous year.
Salary movement among CEOs of a company can vary from year to year, depending on several factors, such as company performance, market competition, regulatory changes, among others.
According to Fernando Furtado, director of executive compensation at Korn Ferry, a CEO’s direct salary usually consists of three parts:
• a fixed monthly installment, which reflects the company’s competitiveness with respect to the competitor market;
• a short-term variable portion, usually annually, paid as a bonus or profit sharing;
• a long-term variable installment, which can be paid in cash, shares or corporate options. The fixed and variable quotas represent the potential profitability of the Chief Executive Officer upon achieving the results expected by the shareholders.
wage increase
In 2022, there was a 9.1% increase in compensation for CEOs, 9.9% for executives and 8% for general managers. While pay for top executives has seen the most growth over the past year, CEOs have seen the smallest increases since 2019, according to the chart from the Korn Ferry study. These percentages were calculated considering the change in remuneration of the executives who remained in office within each company, compared to the previous year.
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The covid-19 pandemic had a major impact on wage adjustments in 2020. With the economic downturn resulting from the pandemic, many companies have faced financial challenges and reduced costs, including employee salaries. In many cases, cost-containment measures have been implemented, such as salary freezes, temporary salary reductions or the deferment of salary increases.
“Overall, pay increases in 2020 were limited and many companies have taken an observational approach to better understand the impacts of the pandemic. After this period, research has shown that these positions have received more representative readjustments mainly due to the recovery of the pace of business and, also, to avoid possible losses of their managers in the market, given the imminent increase in competitiveness for the talents that it was accentuated by the need for transformation of many companies,” Furtado points out.
Source: Terra
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