Elon Musk, other CEO's median pay packages fell in 2022

The Yahoo Finance Live team discusses CEO pay packages of S&P 500 companies at the end of 2022 compared to what they were initially awarded.

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SEANA SMITH: Let's dive into some trending stories and stocks that we're watching here in the final 30 minutes of trading. This story it got my attention today, CEO pay. The majority of chief executives at S&P 500 companies ended the year with smaller pay packages than they were initially awarded. So a perfect example of this, you're looking at the guy right now on your screen, Elon Musk.

The stock awards that he got for running Tesla lost nearly $10 billion in value last year. And now it's not a huge surprise considering that Tesla shares fell about 65% from January 1, 2022 through the end of the year. We've got Josh Schafer and Brooke DiPalma here sitting at the desk to break all these trending stories down.

Josh, I'm going to send it over to you first just in terms of the trend that we have seen in pay. When you take a look at the underperformance of a number of these companies within the S&P 500, not a big surprise.

JOSH SCHAFER: Not a big surprise. The Elon one-- the Elon one is sort of funny in some ways, right, because who sent Tesla stock down maybe arguably the most over the last year was Elon selling some of that stock and all the things he's done with Twitter. So in some ways, you could argue, Elon maybe did some of that to himself, which was interesting.

And then I also just think broadly when you think about this, I mean, this is what you want as an investor, right? You want these executives to be attentive to the stock price. That's the whole point of why these structures are built out this way.

So you see a company like Amazon and Andy Jassy making significantly less money this year because guess who made significantly less money last year too, those shareholders, right? They lost a lot of money.

DIANE KING HALL: And a lot of the way the pay packages are set up is more of it has to do with the stock price, and then, of course, there's the vesting schedule that plays into that. So the vesting schedule can affect when they actually receive that pay for performance, if you will. So to your point, Josh, it matters how the share price does. They have to be incentivized to help the company perform or else they don't receive any kind of benefit from that.

But one thing I did notice about the holistic picture of pay, although it was down, it's still not off that much. I mean, it was a record in the prior market.

SEANA SMITH: Musk was off $10 billion. For some people, it's off a pretty significant amount.

DIANE KING HALL: Yes. For some, yes, but in general when you look at CEO pay as a whole, it wasn't.

BROOKE DIPALMA: And on the flip side, I mean, this could work in the C-suite executives' favor. I noted in the report that some 140 CEOs earn more money than they initially expected. 46 companies, the CEOs ended with at least double of what the board plan to pay them. And so certainly what we're seeing here is this timing of investments could work out in the CEO's favor, if the stock does perform well. And investors awarding this at the end of the day, if they're performing well, then ultimately, they're getting more money at the end of the day. So it's a win-win there.

JOSH SCHAFER: And the other thing too, Brooke, that's just interesting to point out here when you look at some of the top paid CEOs, right? You have Sundar Pichai at Alphabet and Michael Rapino of Live Nation. Those two come to mind. They're not only the top paid, but also were very much in headlines in 2022, not always in positive ways, right guys?

We've had analysts essentially call for Pichai to maybe step down. They just had a positive leading last week, obviously, regarding AI, but he has not been in positive limelight. Live Nation, you think about Ticketmaster and that whole saga in 2022. I'm not sure if you've just read headlines, you would think those would be the two CEOs leading that in 2022.

SEANA SMITH: Yeah, exactly. It is a bit of a surprise there. I didn't think about it that way. But certainly when it comes to Live Nation, I think that argument might be a little bit stronger than Sundar Pichai, given the track record.

DIANE KING HALL: Yeah, I was about to say, not Sundar Pichai.

SEANA SMITH: I think he'll be fine.