Not a good year but some execs make millions in company stock

NEW YORK • Even as millions of people in the United States have lost their jobs during the coronavirus pandemic, the soaring stock market since spring has delivered outsize gains to the wealthiest Americans. And few among the super-rich have done as well as corporate executives who received stock awards this year.

Dick's Sporting Goods chief executive Edward Stack and Peloton president William Lynch, for example, are each sitting on paper gains of more than US$60 million (S$81.5 million) on stock-based awards they mostly received in the first three months of the year, based on Wednesday's closing stock prices, according to an analysis by Institutional Shareholder Services (ISS), which advises investors on how to vote on corporate matters.

And Mr Stephane Bancel, chief executive of Moderna, a drugmaker developing a coronavirus vaccine, received options in February that have appreciated by nearly US$30 million.

The pay gains are a result of the sharp rise in the stock prices of these companies, which investors are betting are well-positioned to grow during the pandemic.

Another reason these stock awards have appreciated so much is that some of the grants were made when the stock market was close to its lowest point for the year.

These gains are also a reminder that income and wealth in the US economy are tilted heavily towards a tiny number of top earners who own significant amounts of stock. Most Americans own little or no stock, according to a recent Federal Reserve report, and many had less in savings in 2019 than they did before the last recession a decade ago.

"The stock market is not an indicator of the health of the economy for working people; it's an indicator of economic inequality," said Mr Brandon Rees, deputy director of corporations and capital markets at the AFL-CIO. "These CEO payments reflect that reality."

For decades, corporate boards have tried to tie executive pay to the performance of the company's stock in an effort to make managers more accountable to shareholders.

Mr Stack's compensation shows how top executives can rack up such large gains so quickly.

In March, when the stock market was close to its low point and the share price for Dick's Sporting Goods was also at a nadir, he received 355 per cent more stock options for his 2020 award than for his 2019 grant and 142 per cent more restricted shares, according to the ISS analysis and the company's securities filings.

The ISS analysis covers top executives whose pay details are included in companies' proxies, documents that publicly traded businesses file with the Securities and Exchange Commission annually.

Not all executives have gains on their 2020 grants because many companies have struggled in the pandemic. In its survey, which covers 2020 grants made by companies in the Russell 3000 stock index, ISS found that 1,675 "named executive officers", or the executives who appear in proxies, had gains, while 1,388 had losses, as of Wednesday's closing stock prices. The average appreciation was nearly US$1.5 million and the average loss US$827,000.

The chief executives of technology companies, many of which have thrived during the pandemic, have done particularly well. Their average gain on 2020 grants was US$3.2 million, while the average loss was US$543,000.

NYTIMES