Jamie Dimon, chairman and chief executive officer of JPMorgan/Photographer: Al Drago/Bloomberg
Rank-and-file workers primarily bear the brunt of downsizing when their companies aren’t doing well. The people who most need to hold onto their salaries are vulnerable to job losses, while the highly compensated CEOs usually get to keep their positions.
As a white-collar recession emerged, as reflected by the layoffs announced by some of the world’s largest and most profitable companies, like Amazon, Microsoft, Meta, Google and Goldman Sachs, the CEOs were left untouched.
Decisions made by the top executives, such as hiring too aggressively, and their lack of preparation for dealing with record-high inflation rates and rapidly rising costs, resulted in significant layoffs impacting workers who didn’t have a say in the running of the organization. Although they made mistakes, the CEOs and C-suite executives seemed immune from taking their fair share of blame and pain—until now.
The tides are turning as shareholders, activist hedge funds and corporate boards are taking action by cutting the pay of some of the top chief executives. Sundar Pichai (Alphabet), Tim Cook (Apple), Jamie Dimon (JPMorgan), David Solomon (Goldman Sachs), James Gorman (Morgan Stanley) and Pat Gelsinger (Intel) are all taking pay cuts. Despite the slap on the wrist, there won’t be a need to raise a GoFundMe page for these executives, as they’re still earning small fortunes in stock awards.
Google plans to cut senior executives’ pay as part of a cost-cutting initiative, in addition to laying off 12,000 workers. In a town hall meeting with employees last week, Pichai announced executives at the senior-vice-president level and above would see a “very significant reduction in their annual bonus,” according to the Wall Street Journal. The CEO indicated that for these roles, compensation is linked to company performance. It is unclear how much Pichai’s pay will be reduced.
Barron’s reported in December that the chief executive was awarded a new equity package by Alphabet’s board, valued at around $210 million, which may depend upon the performance of the shares.
The company has been receiving pressure from activist investors, including Christopher Hohn, a U.K. billionaire, who wrote a letter to Alphabet asserting that its employees are paid too much compared to other tech giants and its bloated workforce needs to be cut down.
Apple
According to a Securities and Exchange Commission filing, Cook’s annual compensation target for 2023 is $49 million, down from around $84 million last year. This marks a more than 40% dock in pay for the chief executive.
In addition to reducing the total target, 75% of Cook’s vesting shares will be tied to the iPhone maker’s stock performance this year, instead of 50%, CNBC reported.
Cook yielded to resistance over his lush compensation package, as advisory firm Institutional Shareholder Services expressed to Apple shareholders “significant concerns regarding the design and magnitude.” Even though stockholders ended up approving his pay package—64.4% voting in support—the billionaire CEO agreed that it should be scaled back.
Apple is one of the few tech giants that has not announced a recent downsizing.
JPMorgan
JPMorgan is removing the “special award” component of its CEO’s compensation this year. According to a recent regulatory filing, the investment bank’s chief executive will receive a $1.5 million base salary and bonus of $33 million—totaling $34.5 million.
Last year, Dimon’s special award amounted to $50 million in additional compensation. After criticism from the bank’s board, the firm will not grant the CEO this special payment in 2023 and has “committed to not grant any special awards to him in the future.”
In May, JPMorgan shareholders rejected an options bonus for the CEO, following his take-home pay of $84.4 million in 2021, MarketWatch reported.
Goldman Sachs
Goldman Sachs’ CEO will receive about 29% less pay after a challenging year, marked by fewer initial public offerings, mergers and acquisitions and deal-making. Global IPO activity fell 45% year-over-year, according to data from Ernst & Young.
The New York City-based bank saw its stock price drop by 10% and its net earnings plunge by $10.4 billion after a big year in 2021.
Solomon, also known as DJ D-Sol, will receive $25 million for his work in 2022, compared to $35 million in 2021, according to an SEC filing. His annual base salary remains at $2 million, plus $23 million in variable compensation. The pay cut marks the latest in a series of tough developments for Goldman, including a cover story in the Economist with a photo rebranding the bank as “Goldman Sags.” Last month, the investment bank announced it was laying off as many as 3,200 employees in its most considerable job reduction since the financial crisis.
Morgan Stanley
Morgan Stanley cut its CEO’s compensation by 10%, from $35 million to $31.5 million, the bank said in a recent regulatory filing.
The investment bank’s compensation committee determined that Morgan Stanley’s performance for 2022 was not as strong as the prior year, in which it achieved record financial performance. Profit at the bank fell 27% to $11 billion in 2022, and net revenue dropped 10% to $53.7 billion.
In December, Morgan Stanley cut about 1,600 jobs amongst its global staff.
Intel
Intel’s CEO is taking a 25% pay cut just days after the semiconductor maker’s poor fourth-quarter results, reported the Wall Street Journal. Additionally, the company’s executive team will see their base pay reduced by 15%. Senior managers will get a 10% cut and mid-level managers will have their pay slashed by 5%. The firm is also reportedly trimming 401(k) matching for employees in half.
Intel has confirmed that it will cut over 500 jobs in its Santa Clara and Folsom, California locations.
The pay cuts could be a sign of things to come in the technology industry after a tough year in 2022, as companies look for new ways to improve the bottom line. Intel is also losing market share to its rivals. Advanced Micro Devices, another chip maker, on Tuesday reported an increase in sales, as gains in its data-center business offset weakness in PCs.
