Client profitability and CEO bonus payouts: could they be bargaining tools when pitching to clients?
We suggest freelancers and contractors look to CEO bonus payouts and company profitability to be better informed when pitching and negotiating rates
There is no proven direct correlation between the size of a company’s CEO bonus and the rates it offers to freelancers. However, there are some indirect factors that may affect both.
For example, companies with larger CEO bonuses are often more profitable. This means that they may have more budget to spend on freelancers. Arguably, companies with more profitable business models may be able to afford to pay freelancers higher rates.
While some argue that CEOs’ unique responsibilities and pressures justify their high compensation, concerns about fairness, equity, and the collective contribution of all employees to a company’s success remain central to the debate, according to Adam Garcia, Founder of The Stock Dork. He says balancing the attraction of top leadership talent with broader social and economic implications poses an ongoing challenge for businesses.
“It’s intriguing to observe the compensation models of renowned CEOs,” says Garcia. “For instance, in 2022, Mark Zuckerberg of Meta Platforms chose a symbolic $1 salary and forwent any bonus. However, he received $27 million in other compensation-like awards, covering 401(k) investments and security costs.”
Many top executives are increasingly favouring stocks, options and performance-related rewards. According to Garcia, this shift in strategy aligns CEOs’ incentives with their companies’ growth and is well-received by board members.
If as a freelancer you can show clients how you could help increase growth or other key milestones, that is “pitching with alignment”. In other words, aligning with client values, which should help your chances of successfully dictating higher rates.
It is important to note that there are other obvious factors that can affect freelancer rates. These include the sought-after skills, a portfolio, years of experience, and the company’s location.
Negotiate directly with clients
Ultimately, the best way to determine if a company offers good rates for freelancers is to negotiate directly with the company. Freelancers can also use online marketplaces to compare rates and find the best deals. They can also reach out to freelancer forums or social media sites, such as The Freelance Informer, to ask fellow freelancers how they are determining their rates.
Here are some tips for freelancers negotiating higher rates:
- Be confident in your skills and experience.
- Do your research and know your market value.
- Be prepared to walk away from a deal if you’re not getting the rate you deserve.
- Be willing to negotiate on other aspects of the contract, such as payment terms and scope of work.
The CEOs with the most jaw-dropping bonus payments
A new study has named Elon Musk as the CEO who received the most jaw-dropping bonus payment in recent years. The analysis undertaken by The Stock Dork examined bonus payments of CEOs from the top 50 market cap companies over the last five years to determine those with the highest compensation payments and average compensation over the period. Now, in recent years there have been mixed emotions about what it’s like to work for Musk and Musk’s hiring and retention practices when it comes to contractors.
It would seem if you are scrappy, effective and can solve problems fast or even prevent them from arising, Musk values you regardless if you are an employee or contractor.
#1 Elon Musk. The CEO with the most impressive average yearly bonus is Elon Musk of Tesla (NASDAQ: TSLA). Musk’s average yearly bonus stands at an impressive $456.7 million. A significant chunk of this average was influenced by a massive one-time stock option bonus of $2.23 billion in 2018, the largest ever given to a CEO.
If Elon Musk had received this monumental bonus today, it would equate to the Tesla CEO taking home $67,011 for every $1 earned by his median-paid employees. While his substantial earnings are closely tied to performance-based stock options, this direct comparison highlights the significant wage disparity within the company’s leadership.
#2 Sundar Pichai. In second place is Sundar Pichai of Alphabet (NASDAQ: GOOGL). His average yearly bonus is a whopping $98.9 million. In 2022 he received $10 million as a cash bonus and $42.2 million as stocks, which means that for every dollar the median Google employee earned, Sundar Pichai took home $275 in bonus payments.
#3 Andy Jassy. Securing third place is Andy Jassy of Amazon (NASDAQ: AMZN). Andy Jassy’s yearly bonus average lands at $53.4 million. The Amazon CEO’s highest recent bonus was in 2021, when he received a $211 million equity bonus. Andy Jassy collected $6,198 as bonus payments for every dollar the typical Amazon worker made.
#4 Safra Catz of Oracle. (NYSE: ORCL) takes the fourth spot with an average bonus of $50.8 million a year. In 2022, Safra was awarded $129 million in stock options, which, when broken down, reveals that for every dollar earned by the average Oracle employee, Safra took home $1,723 in bonuses. Stock awards comprise a considerable portion of her compensation, reflecting Oracle’s long-term growth strategy.
#5 Tim Cook. In fifth place, we find Tim Cook of Apple (NASDAQ: AAPL), whose yearly bonus averages $43.9 million. In 2022, Tim was awarded $82 million in stocks, which means that for every dollar the average Apple employee earned that year, their CEO took home $982 in stock bonuses. Though Tim was also awarded a $12 million cash bonus, Apple heavily leans on stock awards for executive bonuses, ensuring that CEO interests align with those of the shareholders.
#6 Satya Nadella. In sixth place is Microsoft’s (NASDAQ: MSFT) CEO, Satya Nadella, who receives an average bonus of $41.2 million each year, and securing the seventh spot is Jamie Dimon, the CEO of JPMorgan Chase (NYSE: JPM), who receives an average yearly bonus of $40.6 million.
#7 Patrick P. Gelsinger. Intel’s (NASDAQ: INTC) CEO Patrick P. Gelsinger ranks eighth with a yearly bonus of $37.2 million
#8 Shantanu Narayen. Adobe’s (NASDAQ: ADBE) CEO Shantanu Narayen secures the ninth position with an average annual bonus of $34.9 million.
#9 James P. Gorman. Morgan Stanley’s (NYSE: MS) CEO James P. Gorman rounds out the top ten. His yearly bonus stands at $31.1 million. In 2022, he was awarded a total bonus of $37 million, with $30 million coming from stocks. This equates to a pay ratio of 1:263 when compared to the median salary at Morgan Stanley.
The European companies with the highest profitability per employee
Research in partnership with global fintech group Plus500 compared the top 100 companies in Europe by market cap. They looked at profit in 2022 and divided it by the number of employees that work within the company. This gave the amount of profit that the company makes per every employee that works there.
A spokesperson from Plus500 said having fewer employees doesn’t always equate to more revenue and profit per employee. “Undertaking research into profitability per employee metrics is important to consider before taking a position in or trading the stock of these listed European giants. After all, more high-quality employees can often lead to higher output and in turn more customers, better customer retention, enhanced profitability and superior returns.”
That in itself is another way to pitch your high-quality freelance services: high-quality talent that can lead to greater output for clients.
The Freelance Informer is not suggesting these are freelancer-friendly companies, nor endorsing them. We are reporting what has been unearthed through research: the following companies are very profitable.
1 – Hapag-Lloyd – Germany
Market Cap: £31,350,000,000
Share Price: £155.51
Hapag Lloyd is a German international shipping and container transportation company. With over 250 vessels Hapag Lloyd employs 12,499 land staff and 1,609 sea staff. In 2022 Hapag Lloyd recorded profits of over £14 billion – a very strong financial performance, and almost £6 billion more than 2021. This means that the company earned £1,058,898.94 per employee, which is almost triple that of Shell in second place.
Profit per employee: £1,058,898
2 – Shell
Market Cap: £161,740,000,000
Share Price: £2376.00
Shell plc is a British multinational oil and gas company. Shell doubled its 2021 profits making £31 billion in 2022 and has over 86,000 employees worldwide, which means per employee the company makes £365,041 of profit per employee.
Profit per employee: £365,041
3 – BP
Market Cap: £81,760,000,000
Share Price: £478.83
Third is another British multinational oil and gas company. Profiting £22 billion in 2022, much like Shell, BP’s profits also doubled from 2021. BP does have slightly fewer employees than Shell with 67,000 worldwide. This means per each employee BP made £325,081.
Profit per employee: £325,081
4 – ENI
Market Cap: £40,420,000,000
Share Price: £24.09
In fourth is another multinational energy corporation, and another one of the seven ‘supermajor’ oil companies, this time originating in Italy. ENI profited £10 billion in 2022 with only about 32,000 employees globally. This equates to £324,293 per employee.
Profit per employee: £324,293
5 – Rio Tinto
Market Cap: £77,360,000,000
Share Price: £4611.40
Rio Tinto Group is an Anglo-Australian company that is the world’s second-largest metals and mining corporation. In 2022 profit was around £16 billion which was down from 2021’s figures of around £22 billion. This means that in 2022 each of Rio Tinto’s 53,000 employees made £299,581 profit.
Profit per employee: £299,581
6 – Maersk
Market Cap: £26,540,000,000
Share Price: £1563.84
Maersk is a Danish shipping and logistics company founded in 1904, business activities include shipping, port operation, supply chain management and warehousing. Due to its vast range of operations, Maersk has a larger workforce with over 100,000 people. However, with profits of £24 billion in 2022, this equates to £233,163 per employee.
Profit per employee: £233,162
7 – Ferrari
Market Cap: £42,573,000,000
Share Price: £244.81
Founded in 1939 by Enzo Ferrari, Ferrari has been a leader in luxury sports and supercar manufacturing since its inception. However, almost half of the company’s revenue actually comes from merchandise and not cars. Despite profiting only £1 billion in 2022, Ferrari made £227,364 per employee due to the company only employing just over 4,500 people.
Profit per employee: £227,364
8 – Ørsted
Market Cap: £175,207,000,000
Share Price: £20.20
Ørsted is the second Danish company in this list, and the fourth energy company. However, Ørsted’s main production is renewable energy sources rather than oil and gas. The company’s philosophy lies in transforming the energy industry to fight climate change. Much like Ferrari, Ørsted has a very small workforce of only 8,000 employees, and with a profit of £1.7 billion that is equal to £216,150 of profit per employee.
Profit per employee: £216,150
9 – Hermes
Market Cap: £144,993,000,000
Share Price: £1606.95
Hermes is a French luxury design house established in 1837. It specializes in leather goods, lifestyle accessories, home furnishings, perfumery, jewellery, and watches. In 2022 the French fashion giants made around £3.8 billion in profit and they only hire around 19,000 employees. This means that Hermes makes £197,722 profit per employee.
Profit per employee: £197,722
10 – British American Tobacco
Market Cap: £56,470,000,000
Share Price: £2,519.80
British American Tobacco plc is a British multinational company that manufactures and sells cigarettes, tobacco and other nicotine products. In 2022 this company made around £8.2 billion, and with 51,000 employees that equals £162,120 profit per employee.
Profit per employee: £162,120