Snap's Evan Spiegel and Big Media's Even Bigger Pay Gap

Snap Inc Bobby Murphy, Evan Spiegel NYSE 2017 - Getty - H 2018

While the tech co-founder's eye-popping paycheck can be considered an outlier — the result of a one-time stock award granted for taking the company public in March — it has reopened the debate over pay equity.

In March 2017, Bernie Sanders and other lawmakers penned a letter insisting that the U.S. Securities and Exchange Commission enact a long-awaited rule requiring companies to disclose how much their CEOs earn relative to the staffers they employ. It was the senator’s latest salvo in his pitch for economic equality, one that made him a popular presidential contender.

With the Feb. 21 revelation that Snap CEO Evan Spiegel earned $638 million in 2017 — making him the second-highest-paid CEO of all time — it appears Sanders may have been onto something. For most of 2017, Snap shares traded well below their $17 IPO price as his app, Snapchat, faced questions about its ability to grow. And Spiegel’s payday happened to be made public on the very day that Snapchat superuser Kylie Jenner singlehandedly shaved more than $1 billion off the company’s market value with her comments that the app is “sooo over.”

While Spiegel’s eye-popping paycheck can be considered an outlier — it was the result of a one-time stock award granted for taking the company public last March — it has reopened the debate over pay equity, perhaps especially in media, where CEOs typically outearn their counterparts in every other industry, even when their companies underperform. Witness: Philippe Dauman, who made $93 million in 2016, the last year he was CEO of Viacom, while shares of the company dropped 12 percent.

Not all of the data for 2017 is available yet, but in 2016 CEOs in traditional and new media dominated Equilar’s list of highest-paid U.S. executives, led by Charter Communications CEO Thomas Rutledge with $98.5 million and followed by CBS CEO Leslie Moonves with $68.6 million. Walt Disney CEO Bob Iger was seventh ($41 million), Discovery Communications CEO David Zaslav was ninth ($37.2 million) and Activision Blizzard CEO Robert Kotick was 10th ($33.1 million). Time Warner’s Jeffrey Bewkes, Liberty Media’s Gregory Maffei and Comcast’s Brian Roberts also made the top 20. (It’s worth noting that Google CEO Sundar Pichai would have topped the list with his $200 million compensation, but technically Larry Page, who famously makes just $1 per year, is the CEO of Google’s publicly held parent company, Alphabet.)

The extravagant pay could become even more of an issue as 2017 figures come in, since traditional media companies haven’t fared so well on Wall Street during the Trump era. “Given how most media stocks have performed since the end of 2013, I think they are all overpaid,” quips Steven Birenberg, founder of Northlake Capital Management.

Even among the richest men in America, there are a few notable divides. Technology giants Apple, Alphabet, Amazon, Microsoft and Facebook were some of the most valuable companies in the world last year, but their executives aren’t always paid commensurately. Apple CEO Tim Cook, for instance, made $12.8 million in 2017, up 47 percent from the previous year due to a large bonus tied to Apple’s financial performance.

Meanwhile, Facebook’s Mark Zuckerberg (a $1 base salary and $5.8 million for security in 2016) and Amazon’s Jeff Bezos (an $82,000 base salary and $1.6 million in security in 2016) receive paltry sums compared to their media peers because, as founders of the companies they oversee, their wealth is tied up in their controlling stock interests. "With these founder/CEOs, retention is not as much of a concern," notes Equilar director of content Dan Marcec. "You can assume that they have a lot personally invested in seeing the company do well."

Tech founders do pay their top lieutenants well, however. Facebook COO Sheryl Sandberg made $24.5 million in 2016 and Amazon senior vp Jeffrey Blackburn, who oversees entertainment businesses including Amazon Studios at the e-commerce giant, got $22.2 million.

It seems Spiegel will follow in the footsteps of founders like Zuckerberg and Bezos when it comes to how he gets paid. Although he was rewarded richly for taking Snap public (an additional 3 percent of shares, valued around $637 million as of Feb. 21), he also cut his salary from $500,000 to $1 at the time of the IPO.

“Spiegel is right at the very top with IPO proceeds," says Hal Vogel, CEO of Vogel Capital Management. But he warns that trying to compare Spiegel's payday to that of his media and technology counterparts would be “like [comparing] a grape against a watermelon.”

This spring, public companies will begin reporting just how much their chiefs make in contrast to their median employee, a new figure known as the CEO pay ratio. Ahead of that change, an anonymous survey conducted by Equilar has substantiated what observers long expected: Media executives make significantly more than their staff, with a reported median CEO pay ratio of 350 to 1. That was a higher ratio than telecom, technology and software chiefs. But the media industry didn't top the list. That distinction went to retail CEOs, who outearn their employees by 669 to 1. 

"These numbers are going to be large and shocking," predicts Marcec. "What most companies have been saying is their biggest challenge is gong to be internal, speaking to their employees about the difference."

Georg Szalai contributed to this report.