By Andy Serwer and Abby Schultz

The highest-paid CEO of 2024 wasn't Jensen Huang, or Tim Cook, or even Elon Musk. Instead, it was James Anderson, the newly appointed CEO of Coherent, a technology company based in Saxonburg, Pa., that makes equipment and products for networking and laser systems.

The little-known Anderson was the only CEO out of 100 in a new study by compensation consulting group Equilar to receive a nine-figure pay package -- $101,497,009, to be exact -- besting the runner-up, Brian Niccol, the new CEO of Starbucks, by a cool $5.7 million.

Anderson's haul is a good bit more than the median annual pay of $25,612,208 for a CEO these days, a record high, according to Equilar. The firm ranked the largest CEO pay packages at companies with revenue of at least $1 billion, based on their most recently filed proxies to the Securities and Exchange Commission as of March 31. The data reflect 2024 figures.

That 25 million bucks is a big chunk of change anyway you slice it, but it is helpful to add some context. First note that median pay for this group of CEOs climbed 9.5% in 2024. That's a nice raise, but relative to what? It's smaller than in 2023, when CEOs received an 11.4% hike, but that figure was the second-highest over the past decade. CEO pay also rose much more than the rate of inflation, 2.9%, and the 3.8% increase for the average U.S. worker in 2024.

Members of the shareholder class might feel less perturbed, though, if they consider stock market returns relative to the CEOs' princely gains, as the total return of 24.9% earned by shareholders of these 100 companies trounced that 9.5% gain in CEO pay. In fact, over the past 10 years, annual CEO pay increases have averaged 8.7%, while total annual returns to shareholders have averaged 10.9%. It's enough to assuage even the most strident shareholder activist.

"One thing that sticks out from this study is the value of stock awards, " says Amit Batish, Equilar's senior director of content. "Stock awards make up about 73% of the CEOs' pay package on this list, at about $18.5 million." That's a 41% increase from fiscal 2023 -- on top of a 20% increase the previous year. "That's pretty eye-popping," he adds.

James Anderson is a case in point. His nine-figure pay package consists almost entirely -- 99.4% -- of stock awards.

Coherent began life in 1971 with the unlikely name of II-VI, which refers to groups II and VI in the periodic table, as the company started by producing cadmium telluride that belonged to those two groups. II-VI bought laser manufacturer Coherent in 2022 and took that company's slightly less ambiguous name.

Last June 3, when Coherent announced that Anderson would join the company as CEO, leaving the same role at Lattice Semiconductor, it rocked the stocks of both companies to the tune of more than $3.5 billion. Anderson's departure was seen as such a blow to Lattice that its stock fell 15.5% the day of the announcement, evaporating some $1.6 billion in market value, while Coherent was up 22.9%, adding nearly $2 billion. That gap has persisted, with Coherent's stock up 17% from the day of Anderson's appointment, while Lattice -- which climbed 875%, or more than 10 times the S&P 500, during Anderson's nearly six-year tenure -- is now down 34%.

OK, so Anderson appears to have magic touch, but is he really worth $100 million? There are indications in Coherent's proxy that it was never the intention to grant a package worth quite that much. It was Coherent's stock soaring with his announcement that pushed its value higher.

First, because Lattice's stock was such a strong performer during Anderson's tenure, the value of his deferred compensation ballooned, so Coherent felt compelled to shell out a sizable "make whole" amount. The value of that grant, plus a new incentive grant, were priced using a 30-day moving average of Coherent's stock, which was then greatly amplified by Coherent's stock popping, making Anderson's comp package that much higher. Or, as the company says in its proxy, "Ironically, the high value of the inducement grants...was driven to a large degree by the market's favorable response to the news of Mr. Anderson's appointment."

If Anderson is the highest paid on the list, who is the lowest? That distinction -- as Bernie Sanders might put it -- belongs to Michael Rhodes, CEO of Ally Financial (the old GMAC, for those of a certain age), a mere piker as he received only $20.9 million.

Though most of the action in compensation comes from stock awards these days, 16 CEOs took home more than $10 million in cash, topped by a perennial list denizen, Apple CEO Tim Cook, with $16.5 million. (Okta CEO Todd McKinnon had the lowest cash comp, $481K -- more typical of, say, a successful anesthesiologist.)

The company with the best-performing stock on the list, chip powerhouse Nvidia, saw its stock rise 215% in its fiscal 2024. CEO Jensen Huang was duly rewarded, receiving total comp of $34.1 million. But his pay package was exceeded by that of Sumit Singh, CEO of online pet supplies company Chewy, who received $35.1 million, according to the company's most recent proxy, despite the stock dropping 60.4% -- the worst performer on Equilar's list. That's bound to draw the ire of a poodle or two, never mind a shareholder or three.

As for Nvidia's Huang, save your tears, as he owns 3.5% of his company, worth $92 billion, even with the stock down recently. (They really do have it coming and going, these CEOs.)

One of the best things about being a CEO is the perks, though these days it's often a more serious matter than gratis club memberships and financial planning.

More companies nowadays are adding personal security services to executive comp packages, a disconcerting trend, as rising polarization in the U.S. seems to be making life dicier for CEOs. The shooting death of Brian Thompson, UnitedHealth Group's health insurance CEO, on a New York City street in December is certainly Exhibit A.

A separate study by Equilar of S&P 500 companies found that of the 208 companies which filed proxy statements as of early April, nearly a third provided some security to their executives, up nearly 28% from 2023.

Starbucks, for instance, provides CEO Niccol -- whose pay package was $95.8 million -- with private planes for all air travel. Apple CEO Cook's total compensation package of $74.6 million includes $783,617 for personal security services and personal air travel expenses of $655,883.

So, where's Elon? The world's wealthiest CEO didn't make Equilar's list. Yes, the CEO of Tesla has an estimated net worth of about $335 billion, according to the Bloomberg Billionaire's Index, but the electric-vehicle maker hasn't filed its proxy statement yet, and even if it had, it might well show that Musk didn't earn anything this year. He last took compensation from Tesla in 2019, likely in part because of a huge 10-year, 12-tranche performance-based pay package worth about $70 billion today and approved by Tesla shareholders in 2018. The package was rejected twice by a Delaware Chancery Court judge, and Tesla's appeal to the latest ruling is being considered by the Delaware Supreme Court.

"We have no real check on CEO pay," says Dean Baker, co-founder of the Center for Economic and Policy Research. "Does anyone ever say, 'Should we pay the CEO less?' " CEO comp packages are "extraordinary," Baker continues. "But we know most [CEOs] aren't extraordinary, and a lot are pretty bad." He cites Berkshire Hathaway CEO Warren Buffett, who said, "I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."

And you can take that to the bank.

Write to Andy Serwer at andy.serwer@barrons.com and Abby Schultz at abby.schultz@barrons.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 01, 2025 01:00 ET (05:00 GMT)

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