Nike CEO John Donahoe II made $32,920,708 in 2021. (Aflcio.org,
2022) This amount includes a base, annual cash incentive, and long-
term cash and stock incentives. (SEC.gov, 2021) (This number is over
$55 million in 2022) Nike corporate employees made an average of
$99,575 in 2021. Product Developer’s make an average of $69,881
while Senior Project Managers make an average of $131,289.
(Payscale.com, 2022) At these rates, the Nike CEO makes 330 times
more than the average corporate employee. In my opinion, CEOs are
rarely truly worth that much more than their employees. Sometimes,
it makes sense when the CEO is the company’s face and main
marketing arm, like Elon Musk. His salary is not technically a salary; it
is an incentive-based compensation. His actions are often a major and
direct factor in the Tesla stock price, so it makes sense that he would
be compensated for that. In the case of Nike, I am not sure that I
agree that Mr. Donahoe works three hundred times harder than his
employees. I do agree, though, that the CEOs of multi-billion-dollar
companies are compensated commensurate with the company’s
success and the growth they have overseen. It is the nature of the
shareholder/corporation relationship that if the shareholders are
happy with the direction and performance of the company, they are
going to approve an executive compensation package that will keep
the CEO happy and with the company.
On the surface, stock compensations are a good thing. They keep the
executives focused on both the short and long-term success of the
company. In general, executive or not, employees benefit from buying
into the company's success. For many people, that buy-in will come
from their direct benefit from the company’s success. The issues start
when personal gain becomes the primary factor in the decision-
making process. If an executive is in trouble financially or just greedy,
they may push their employees to hit bonus targets improperly or
inflate earnings to increase stock prices artificially.
The most effective procedure to determine if there has been an abuse
of the executive compensation package that the shareholders
approved would be AS No. 12. 10, which states an auditor should
“Obtain(ing) an understanding of compensation arrangements with
senior management other than executive officers referred to in
paragraph 10A, including incentive compensation arrangements,
changes or adjustments to those arrangements, and special bonuses;”
(PCAOB) Reviewing the agreement within the SEC filings will help
ensure that the amount that the CEO or other executives are
receiving has not been tampered with.
Sara Holsworth
References
Aflcio.org. (2022). Highest-paid CEOS: AFL-CIO. AFL. Retrieved
September 29, 2022, from https://aflcio.org/paywatch/highest-paid-
ceos
Payscale.com. (2022). Average salary for Nike, inc.. employees.
PayScale. Retrieved September 29, 2022, from
https://www.payscale.com/research/US/Employer=Nike%2C_Inc./S
alary
PCAOB. (n.d.). Auditing Standard No. 12. Default. Retrieved
September 28, 2022, from
https://pcaobus.org/oversight/standards/archived-standards/pre-
reorganized-auditing-standards-
interpretations/details/Auditing_Standard_12
SEC.gov. (2021). Nike Schedule 14A. NIKE, INC. Retrieved
September 29, 2022, from
https://www.sec.gov/Archives/edgar/data/320187/000032018721
000035/nike2021proxy.htm#:~:text=We%20are%20pleased%20to%
20invite,Pacific%20Time.
