Yang Yuanqing figured it out.
On March 31, Yang Yuanqing, chairman and CEO of Lenovo Group, announced in an internal letter that he would voluntarily pay a long-term incentive bonus of 80 million yuan to frontline employees to help them overcome various difficulties caused by the epidemic and other factors. According to Beijing Youth Daily, in fiscal 2021, Yang Yuanqing received a salary of 168 million yuan.
This is not the first time that Yang Yuanqing has paid out of his own pocket. As early as 2012 and 2013, he set up the "Yuanqing Special Award", each giving his own 20 million prize money to nearly 10,000 employees. The gesture of sharing weal and woe with the company has calmed down a lot of the sky-high salary controversy surrounding him some time ago.
In the past two years, tech CEOs have increasingly come into the spotlight because of sky-high salaries. The economic downturn caused by the pandemic has even boosted their pay levels to some extent – as stock prices of technology companies have repeatedly reached new highs during this period. In a report last year, the Wall Street Journal pointed out that in 2020, which is plagued by unemployment among ordinary people, THE salaries of CEOs have risen sharply from previous years, and the median salary of CEOs of more than 300 listed companies in the United States has reached $13.7 million, which is expected to hit a record high.
Apple CEO Tim Cook, one of the highest pay increases in recent years, earned $99 million last year, 1,477 times the average employee. This provoked opposition from ISS, the largest shareholder proxy consultancy in the United States, on the grounds that Cook's compensation was "significantly more than" than the previous year. In 2020, Cook's salary totaled $14.77 million.
China's CEOs are no less than the United States. Titanium Media counted a list of Chinese CEO salaries at the beginning of this year, and Gu Hongdi, vice chairman and president of Xiaopeng Motors, topped the list with an annual salary of 435 million yuan, which was 2.6 times yang Yuanqing's annual salary last year.
The company later responded that the value of the equity held by Gu was misinterpreted as an annual salary, and more than 99.5% of its public compensation was accumulated over many years of equity incentives, not a year's income.
Tesla CEO Musk is probably the person who has received the most real pay from the company over the past few years. While his salary on paper is zero, due to the high equity incentives awarded each year, Forbes believes musk will actually be paid as much as $11 billion in 2020, more than 50 times the annual salary of the second place.
Because of the huge salary level, Musk was sued by a Tesla shareholder. The shareholder sued Musk and Tesla's board of directors in court, saying that the latter did not disclose relevant information to shareholders before approving Musk's compensation plan, and he demanded that the compensation package be revoked to protect the interests of minority shareholders and reorganize the board.
According to the legal database Platinum Site, the case will be tried in the Delaware Justice Court in Tesla's registered place on April 18 this year. At that time, Tesla's board of directors will need to be present and defend the matter.
In the past, people were accustomed to CEOs reaping rewards through impressive levels of performance and excellent governance, which was considered a legitimate and fair business practice. But in an increasingly turbulent world, CEOs have to face tougher scrutiny, not only from business, but also based on group sentiment based on huge income gaps and imbalances.
A
Yang Yuanqing may never have imagined that one day his salary would become the object of criticism.
He has always been the highest paid group of chinese listed companies, and Forbes has pointed out that he has ranked first in the salary of CEOs of listed companies in China for three consecutive years. In 2013, his annual salary exceeded RMB130 million, the first time his annual income exceeded RMB100 million. Lenovo Group said at the time that due to the company's outstanding performance in the fiscal year 2013-2014, the bonuses and long-term incentives given to Yang Yuanqing increased significantly.
After the controversy over 100 million yuan in compensation, he once expressed his confusion to the outside world. It was 2015, and he responded in an interview with CCTV Finance, "After we acquired IBM, we were confused for a long time, domestic employees took very low wages, and we calculated the salaries of employees in the merger according to the US market standards, and I could not get lower wages than my Employees, subordinates, and executives in the United States. ”
This passage was repeatedly mentioned in the years since, as one of the "incriminating evidence" accusing Yang Yuanqing. Last year, Lenovo Group tried to list on the Science and Technology Innovation Board, and the executive compensation disclosed in the prospectus once again caused a hot discussion, and the media tirelessly pointed out in the article that "Yang Yuanqing's salary in the past decade has reached 1.26 billion yuan.".
Now Yang Yuanqing finally understood. In his internal letter for the company's new fiscal year, he highlighted the company's front-line grassroots employees, "In the past two years, they have overcome the difficulties caused by the new crown epidemic and other factors, rain or shine. ”
Yang Yuanqing
As a tribute to these front-line employees, he decided to distribute the $80 million long-term incentive that the company had awarded him earlier as a special reward to these colleagues. Before that, he donated 100 million yuan to his alma mater, the High Performance Computing Center of Shanghai Jiaotong University, which was also officially opened.
In contrast, Cook, who has aroused the opposition of shareholder agencies, and Musk, who has gone to court, are less mature in dealing with such issues.
Apple remained as tough as ever after the ISS strongly protested, declining to comment. In a filing with regulators on executive compensation, it said, "Our 2021 compensation for designated executives is commensurate with Apple's size, performance and profitability, the important scope of their roles and responsibilities, and their strong values-driven leadership." ”
If you take it a long time, Tim Cook is indeed worth the $99 million he was given. In the early days of his succession, he was often compared to Apple's leader, Steve Jobs, who was criticized for not being a geek, too little innovation, and even the jeans and blue shirt he wore at the press conference were the target of blame.
But the financial figures that followed made it all. According to a document released by Apple's board of directors, Cook has returned 867% in earnings to shareholders in a decade since he became CEO in 2011. Apple's market capitalization, which ranged from $1 trillion to $2 trillion, briefly exceeded $3 trillion at the beginning of this year — the world's first company to reach a market capitalization of $3 trillion.
Musk's sky-high salary stems from a big gamble. Tesla's board of directors set up an extremely aggressive compensation plan with him in 2018, with a salary level of zero, and he will only be awarded equity awards after leading the company's market value, revenue and profit to one difficult goal after another.
The plan was hardly favored at the time, and its ultimate goal was Tesla's market capitalization of $650 billion, when Tesla's market capitalization was just over 50 billion. If Tesla's market capitalization can only grow by 80 to 90 percent over the next decade, he will get nothing — even if that's a pretty good number. But he firmly believes that Tesla can eventually become a trillion-dollar company.
Musk
It took him two full years to complete the first phase of his goal: a market capitalization of more than $100 billion. But after that, everything changed. Tesla's stock price soared 689% in 2020, the fastest-growing of any company that year.
In 2021, Musk completed the final goal of the compensation plan 7 years ahead of schedule, and Tesla's market value exceeded one trillion US dollars, which is higher than the combined market value of all traditional car companies in the United States.
B
The debate about the pay gap between CEOs and the average employee has a long history. Whether it is in terms of base or growth rate, CEOs are much ahead of employees.
At some point, some CEOs' salaries continue to grow even as the company loses money. For example, a cruise ship company called Norwegian in the United States, which lost $4 billion in 2020 due to the impact of the epidemic, but its CEO compensation still doubled to $36.4 million.
This may make most people feel unfair. Two French economists, Xavier Gabaix and Augustin Landier, have studied the compensation of CEOs in large companies, and they have proposed that the impact of CEOs on the value of enterprises is often multiplied, and the impact of their actions can be infinitely magnified by the implementation within the company. A good CEO can increase the company's benefits exponentially, compared to the salary provided to the CEO.
More precisely, CEOs and employees are in two completely different markets, and there is no comparison between them. The two economists argue that "what matters is welfare, not fairness."
In order to compete for the best CEOs in the market, companies often offer a complex and expensive salary package. Unlike the average employee, the most important part of a CEO's pay pack is often not salary (they even reject it), but a series of progressive option rewards — the most radical of which Tesla's ten-year compensation plan for Musk is the most radical.
For example, of the $99 million in compensation Cook received from Apple in 2021, the base salary accounted for only $3 million, while the equity award amounted to $82.35 million, the non-equity award was $12 million, and other compensation included $1.39 million in safety premiums, insurance premiums, etc.
Yang Yuanqing's over-100 million salary is also dominated by equity incentives, his basic salary accounts for only 6% of the total salary, and performance bonuses and equity incentives account for 94% of the total compensation. For example, of the $21.359 million compensation Yang Yuanqing received in fiscal 2013, the basic salary was $1.283 million, the performance bonus was $7.159 million, the long-term equity award was $12.647 million, the pension was $128,000, and other benefits were $141,000.
Some CEOs who are themselves the founders of the company will reject the salary because they tend to hold the vast majority of the company's equity and their wealth growth is firmly tied to the company. Typical cases such as Zuckerberg claiming to receive only a salary of $1, and Liu Qiangdong also claiming that his salary is only 1 yuan - but these words are good to listen to, do not take them seriously.
In contrast, Cook may be the real "affordable man". The $99 million he received in 2021, more than $80 million of which came from an equity incentive from 10 years ago.
Cook
That was when Cook took over as Apple's CEO, the board granted him 1 million restricted shares, and the only requirement for this gift was that Cook need to stay in the position of Apple's CEO for 10 years.
Compared with Apple's old rival Google, Cook's salary also lags behind Google CEO Pichai. Back in 2015, Pichai's salary was as high as $100 million, while Cook's annual salary was only $10.28 million.
If you jump out of the technology industry and look at global public companies, Cook's salary will be surpassed by more people. In second place behind Musk on Bloomberg's list of executives from the highest-paid companies in the U.S., mike Pykosz, CEO and co-founder of healthcare services company Oak Street Health, is making $560 million a year. In addition, Blackstone Chairman and CEO Schwarzman paid nearly $800 million a year after 2017, and his total compensation in 2021 will reach $1.1 billion, far exceeding Cook's $99 million.
At the moment when it is often controversial due to sky-high salaries and may even be sued by shareholders, perhaps like Yang Yuanqing, who gave up his bonus and also gave up his hot potato.
Resources:
1. The Biography of Tim Cook: Apple's Reflections on the Future of Business, Leand Carney
2. Iron Man in Silicon Valley: The Adventurous Life of Elon Musk, Ashley Vance
3. Salary of more than 600 million yuan! 1400 times more than employees, Cook's salary is "too high", the agency recommends its "salary cut", daily economic news
4. Apple's eighth largest shareholder stated that it will vote against Apple's management compensation plan, NetEase Intelligence
5. Musk, you have a $2.4 billion pay coming soon, Tiger Sniff
6. Musk wants to take billions of dollars in compensation but was sued by shareholders, and the court asked Tesla to defend Musk, Lei Feng
7. After reducing lenovo's cash out of 300 million, Yang Yuanqinghao, whose annual salary exceeded 100 million, issued a big red envelope: voluntarily gave up 80 million bonuses to grass-roots employees, and Xunxun Network
8. Yang Yuanqing's salary of 130 million yuan was listed on Forbes, leading the CEO of Chinese listed companies and Chinese entrepreneurs