Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!
Expand chart
Data: Axios analysis of Securities and Exchange Commission filings. Chart: Andrew Witherspoon, Kerrie Vila, Lazaro Gamio/Axios

The CEOs running S&P 500 companies cumulatively took home $10 billion in 2017, an amount that is 44% higher than what is usually reported, according to an Axios analysis of Securities and Exchange Commission filings. The big reason: CEOs cashing in their stock.

Why it matters: Annual proxy filings bury the fact that many of America's top executives are sometimes paid even more than what headlines suggest, due almost entirely to the huge gains they reap from the stock market. Meanwhile, worker wages are stagnant, the average household is living on $59,000 a year, and income inequality has become one of the most visible political rallying cries.

Be smart: The massive executive paydays made sense, in that 2017 was a strong year for stocks. Higher stock prices equal more lucrative payouts, especially if executives have been holding onto options for several years. In other words, some CEOs could have taken home less than the headline number in prior years.

  • Company spokespeople said the compensation reflects "positive performance."

This analysis covers total CEO compensation (salary, bonuses, stock, perks and pension/health benefits) based on 2017 proxy documents that companies file annually with the SEC.

  • We calculated the actual realized gains (ARG) of CEOs' stock options and awards — shares that were actually exercised and taxed — versus the estimated fair value (EFV) of their stock that predicts future stock value and is prominently featured in the summary compensation tables of SEC filings.
  • We did this because EFV of stock does not accurately depict how much someone made in a given year.
  • ARG is reported in each company's annual proxy filing. But the numbers are usually buried, and they're in bits and pieces, so they require extra steps to calculate.
  • Our analysis reflects companies that were in the S&P 500 index as of June 1, 2018, and covered people who were CEOs for the majority of 2017. It also includes median employee compensation figures and ratios that compare CEO and median employee pay.
  • Matthew Hopkins, a senior researcher at the nonprofit Academic-Industry Research Network who has studied corporate compensation, reviewed the analysis for accuracy.
Expand chart
Data: Axios analysis of Securities and Exchange Commission filings. Chart: Andrew Witherspoon, Kerrie Vila, Lazaro Gamio/Axios

The big picture: CEOs made a lot more than what is normally portrayed in most media coverage.

  • S&P 500 CEOs cumulatively made more than $10 billion in 2017 after calculating ARG — an amount that exceeds the total economic output of countries like Eritrea — and median CEO pay hovered around $13 million.
  • That compares to about $7 billion of compensation and a median of $12 million based on EFV.
  • Compensation based on ARG was higher than the EFV 53% of the time. ARG was lower if a new CEO didn't exercise stock, or if the company's stock price declined.
  • Nine CEOs made more than $100 million last year under our calculations, compared with just two CEOs under standard rules. Many other prominent executives who aren't CEOs, like Oracle's Larry Ellison and Facebook's Sheryl Sandberg, also took home at least nine figures last year based on ARG. Oracle and Facebook did not comment.
  • Netflix CEO Reed Hastings earned the most in 2017 under these calculations: $179 million, compared with the $24.4 million that was prominently reported in Netflix's annual filing. Netflix declined to comment.

Go deeper: Filtering the data by industry shows where some executives benefited more.

  • CEOs in the tech, finance and health care industries often made a lot more in real dollars than what was normally reported.
  • Conversely, CEOs running energy and utility companies had lower total compensation than was reported because of lagging stock prices.

Listen to Bob Herman discuss his story on Dan Primack's Axios Pro Rata podcast. And subscribe to the podcast here.

Go deeper

In photos: D.C. and U.S. states on alert for pre-inauguration violence

National Guard troops stand behind security fencing with the dome of the U.S. Capitol Building behind them, on Jan. 16. Photo: Kent Nishimura / Los Angeles Times via Getty Images

Security has been stepped up in Washington, D.C., and state capitols across the U.S. as authorities brace for potential violence this weekend.

Driving the news: Following the Jan. 6 insurrection at the U.S. Capitol by some supporters of President Trump, the FBI has said there could be armed protests in D.C. and in all 50 state capitols in the run-up to President-elect Joe Biden's inauguration Wednesday.

11 hours ago - Politics & Policy

The new Washington

Illustration: Sarah Grillo/Axios

The Axios subject-matter experts brief you on the incoming administration's plans and team.

Rep. Lou Correa tests positive for COVID-19

Lou Correa. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

Rep. Lou Correa (D-Calif.) announced on Saturday that he has tested positive for the coronavirus.

Why it matters: Correa is the latest Democratic lawmaker to share his positive test results after last week's deadly Capitol riot. Correa did not shelter in the designated safe zone with his congressional colleagues during the siege, per a spokesperson, instead staying outside to help Capitol Police.