<p><img src="https://static6.businessinsider.com/image/5fce9e6eeadd8400183dfa25-2400/ap_19292715817058.jpg" border="0" alt="Costco CEO W. Craig Jelinek" data-mce-source="AP Photo/Nati Harnik" data-mce-caption="Costco CEO Craig Jelinek greets a guest during a ribbon cutting and open house event to mark the opening of the Lincoln Premium Poultry plant, Costco Wholesale's dedicated poultry supplier, in Fremont, Neb., Saturday, Oct. 19, 2019."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Costco released third quarter earnings Thursday, beating analyst estimates with earnings of $2.62 per diluted share, higher than expectations of $2.04. This is also indicates a 38% increase from Costco's first quarter diluted earnings per share last year.</p><p>The executives pulling the retail giant through the pandemic are paid wellmostly in the form of long-term awards. Let's dig into the firm's 2020 compensation.</p><h2>Costco's executives and what they earned</h2><p>In 2020, Costco executives earned an average of $5.4 million, ranging from $4.5 million for James Murphy, the chief operating officer of Costco's International Division, to $8.3 million for the firm's CEO Craig Jelinek.</p><p>The compensation relied heavily on long-term awardswhile each executive, excluding the CEO, had a salary of less than $1 million, their stock awards made up more than 70% of total reported compensation. Each executive besides the CEO received an equity award worth at least $3.5 million at the time of the grant. The CEO received an award worth $6,844,496 at the time of the grant. The grants were awarded based on achieving goals around sales and pre-tax income.</p><p>In the chart below, we show compensation for each executive as it was presented in the summary compensation table in Costco's <a href="https://www.bamsec.com/filing/90983220000021'cik=909832">proxy statement</a>, split out by element. Hold your cursor over the labels at the top to highlight the different parts of the executives' compensation, and reference the bulleted list below for more information on each compensation element.</p><div><iframe title="2019 Costco executive compensation" aria-label="Stacked Bars" id="datawrapper-chart-6JYGJ" src="https://datawrapper.dwcdn.net/6JYGJ/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="456"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"])for(var e in a.data["datawrapper-height"]){var t=document.getElementById("datawrapper-chart-"+e)||document.querySelector("iframe[src*='"+e+"']");t&&(t.style.height=a.data["datawrapper-height"][e]+"px")}}))}();</script></div><h2>The executives own stakes that make up a small portion of total firm ownership</h2><p>Sometimes, executives at firms will own large portions of the firm's stock in order to control voting power or simply increase wealth. This is not true for Costco. None of Costco's executives own more than 1% of the shares at the firm.</p><p>As of the date the proxy statement was published, Jelinek owned 333,410 shares, worth $126.6 million at market open Friday. Other executives stakes are as follows:</p><ul><li>Richard Galanti: $12,760,652</li><li>James Murphy: $15,041,171</li><li>Joseph Portera: $4,286,464</li><li>Ron Vachris: $7,558,183</li></ul><p><strong>What the terms in the table mean:</strong></p><ul><li><strong>Salary</strong>: The salary an executive earns in a given year.</li><li><strong>Stock awards/option awards</strong>: Equity awards based on achievement within a firm's long-term incentive plan. Long-term incentives are also considered "at-risk" pay. Stock and option awards are two different types of equity awardsstocks are direct equity awards, while options give the executive the right to buy shares at a specific price.</li><li><strong>NEIP</strong>: Typically cash grants for performance in the short term. Bonuses are typically one-off awards, while anything in the column titled NEIP (nonequity incentive plan) typically means the awards are granted as part of a firm's short-term incentive plan and granted in cash (hence the "nonequity" label). Short-term incentives are thought of as part of "at-risk" pay, meaning that the executive must hit goals or benchmarks to receive the award.</li><li><strong>Other compensation</strong>: This number includes any value from the compensation data related to pension plans or nonqualified deferred-compensation earnings. It also includes any payments designated as "other compensation," which can include payment for things like personal or home security, employees' benefits plans, country-club fees, fees related to use of company aircraft, and even relocation expenses.</li><li><strong>Total compensation</strong>: All amounts summed.</li></ul><p><a href="https://www.businessinsider.com/retail-giant-costco-pay-executive-compensation-2020-12#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
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