Broadcom CEO pay award jumps 164% to $160.8 million

Stock awards front loaded, get five years in one go

Broadcom's boss Hock Tan more than doubled his total compensation package in fiscal 2023, which will no doubt be well received by the thousands of small VMware customers and cloud providers he's upset.

The one-time chip biz that has ambitions to become the "world's leading infrastructure company" this week released a proxy statement ahead of the 2024 Annual Meeting of Stockholders scheduled for April 22, 2024.

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On the agenda at the meeting is a ballot for electing the nine directors nominated; ratifying PWC as an independent public accounting firm for Broadcom; and approving exec compensation. The last one might be interesting, give the size of Tan's latest award.

That last one, money and shares for the C-suite, was outlined in the proxy statement, and makes for some eye-watering sums. President and CEO Tan saw his financial award swell to $161.8 million in the fiscal year ended October 29, up from a paltry looking $60.6 million in the prior year.

Like most senior folk in tech, his baseline salary was just a fraction of the overall compensation pot, just $1.2 million. The lion's share, $160.5 million, was comprised of stock awards, and the remainder termed as "all other compensation" was in relation to the company travel budget.

The maximum vesting opportunity for performance share units (PSUs) was "front-loaded" to cover the next five years of annual equity awards from 2023, says Broadcom in the proxy statement.

"During the five-year vesting period, the independent directors do not intend to grant Mr Tan annual equity awards and Mr Tan will not be eligible to receive annual cash incentive payouts under the APB Plan because the 2023 Tan PSU Award was front-loaded," the document states.

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For fiscal '23, Broadcom reported an eight percent year-on-year rise in revenue to $35.8 billion, a 14 percent bounce to record operating profit of $16.2 billion, and free clash flow of $17.6 billion, up eight percent.

How did the other execs at Broadcom do? Not as well as their boss: CFO Kirsten Spears was awarded $15.24 million, chief legal officer Mark D. Brazeal got $15.49 million and President of the Semiconductor Group, Charlie B. Kawwas, was awarded $49.68 million, again stock awards that vested made up the lion share of his financial reward.

The average annual total compensation for all employees, except the CEO, was $317,199 last year, equating to a CEO to staff pay ratio of 510 to 1.

Broadcom paid $61 billion to buy VMware in November, convincing regulators that they didn't need to worry about the sale hurting competition. It then divided the business into four units – none of which included end user compute.

The company has since carved up VMware, releasing employees including senior ones; perpetual licenses were killed, and the new license structure means only the biggest customers are welcome: Broadcom made the operation of 3,500 cores running VMware Foundation Cloud the base requirement for inclusion in the partner program, turning its back on SME customers, resellers and CSPs on one swoop.

Some at VMware reckon customers like the new subscriptions but not everyone agrees, with some CIOs saying there are now two primary pricing bundles, compared to 160 individual products previously, and they have to pay for products they might not use or want.

The end user computing element of the portfolio is going to a new home - KKR. And the thousands of third parties that used to sell VMware will be forced to buy via the select band of masters resellers and CSPs that are being grandfathered into the Broadcom partner program.

The existing Vmware reseller and CSP schemes were ditched. ®

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