A footnote in Palantir’s compensation disclosure made me laugh, which was worth noting because these compensation disclosures usually make me frown.
Referring to Mr. Karp’s apparently gigantic payday, it said: “The term ‘compensation actually paid’ or ‘CAP’ does not reflect the amount of compensation actually paid, earned or received by him during the applicable year.”
In reality, Palantir said, the numbers reported by Karp and a handful of other Palantir executives “are primarily driven by changes in our stock price,” which rose more than 100 percent in 2023, producing big gains for shareholders and , therefore, “Following SEC disclosure rules, the fiscal year 2023 CAP disclosed below has increased.” But the year before, 2022, was miserable for the entire stock market. Palantir’s stock fell sharply, as did the value of Mr. Karp’s compensation, using the New Accounting approach. By 2022, the company said, it lost more than $1.7 billion.
These staggering and fluctuating sums would be baffling in isolation. Still, I think they serve a purpose. Large changes in this measure are a sign that a CEO has received huge compensation packages tied to company stock in the past. For example, The Times reported that for 2020, Karp received $1.1 billion in traditional salary, the most for any CEO that year.
Similarly, Broadcom reported that in 2023, Mr. Tan’s compensation under New Accounting was $767,654,487, nearly five times his already rich compensation on the traditional pay list. That happened because the stock price rose and Tan, CEO of his company since 2006, had accumulated a large amount of stocks, options and the like.