It's been a lucrative few years for chip makers. As companies look to capitalize on the AI boom, technology needs continue to rise. That includes all kinds of chips and processors, and those companies are reaping the benefits. While Nvidia has gotten the most headlines, another company is doing quite well, too—and its CEO is reaping the benefits.
Broadcom offered Hock Tan a stock award worth $160.54 million in October 2022. Since Tan received that bonus, the company's share price has seen a massive increase. As a result, those same bonus shares are now worth about $1.3 billion.
There's a bit of a catch to all this, so let's see how the math breaks down.
Ying Tang/NurPhoto via Getty Images
Broadcom disclosed in its filings that Tan's stock award is supposed to serve as his pay for the next five years. For the stock to fully vest, Broadcom's share price must hit a certain target. Tan must also remain CEO throughout that timeframe. Per the company, his 2023 pay will be about $33 million annualized over the next half-decade.
After about 25% of the pay period was completed, Broadcom shares had already hit the three stock-price targets as part of Tan's contract. The company's shares are currently hovering around $1,315 as of this writing. If the share price averages at least $1,125 over a 20-day span in November 2025 and Tan is still CEO through 2027, his stocks will fully vest.
While Tan technically can't cash in his stock shares for more than a billion dollars quite yet, his previous performance is a strong indicator of success. Since being named CEO in 2006, Tan has helped the company increase its market value by more than 160 times. Last fiscal year, shareholders enjoyed an 80% return.
This type of deal is a growing trend, particularly in the tech space. Businesses will offer a pay package largely or entirely centered around stock options. When the market is thriving, those shares have a positive impact on the people leading their companies. Beyond Tan, Adobe CEO Shantanu Narayen saw his 2023 earnings nearly double, while Cisco's CEO Charles Robbins made more than double what he did the previous year.
Of course, things can go the other way, too. Some companies have seen a downturn in their share price, costing their CEOs (and shareholders) millions of dollars.
And when there's potential to make money, there's also a stronger likelihood of questionable activity. In January, a court threw out the 2018 pay package for Elon Musk, believing the Tesla board and its founder were too closely tied together. Musk's package of stock options grew from $2.3 billion to $55 billion.
The bottom line is clear: CEOs will continue to earn huge amounts of money, even if the pay packages become a bit more creative.
