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Broadcom's CEO More Than Double Pay Rise to $161.8 Million in 2023

Broadcom’s CEO More Than Double Pay Rise to $161.8 Million in 2023

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Chipmaker Broadcom’s CEO, Hock Tan, saw a staggering surge in his annual compensation, which more than doubled to a whopping $161.8 million in 2023. This significant increase in Tan’s pay was revealed in a filing with the Securities and Exchange Commission (SEC) on Monday, shedding light on executive compensation practices within the tech industry.

Stock Awards Drive Compensation Surge

Broadcom's CEO More Than Double Pay Rise to $161.8 Million in 2023

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The bulk of Tan’s 2023 compensation, totaling $160.5 million, stemmed from stock awards, illustrating the significant reliance on equity-based incentives in executive remuneration packages. Compared to his 2022 pay of $60.6 million, with $53.9 million attributed to stock awards, this marks a remarkable escalation in executive compensation within Broadcom.

This surge in compensation not only reflects Broadcom’s confidence in Tan’s leadership but also underscores the company’s performance and strategic direction under his guidance.

Widening Disparity in Pay Ratio

Tan’s eye-catching compensation figure highlights the widening gap between executive pay and the median salary of employees within the chip firm. With Tan’s pay being 510 times the median salary, it underscores the ongoing debate surrounding income inequality and executive compensation practices. Such disparities often invite scrutiny from various stakeholders, including investors, employees, and policymakers, prompting discussions on fair and equitable compensation structures.

Contextualizing Broadcom's Performance

Broadcom’s robust financial performance and strategic maneuvers provide context to Tan’s substantial compensation increase. The chipmaker’s successful closure of the $69 billion acquisition of cloud-computing firm VMware in the previous year, following regulatory approvals, underscores its strategic expansion efforts and market positioning. The resolution of regulatory hurdles, particularly in crucial markets like China, signifies Broadcom’s adeptness in navigating complex regulatory landscapes.

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Furthermore, Broadcom’s strong financial performance, evidenced by its 2023 revenue of $35.82 billion, further justifies the substantial compensation awarded to Tan. The company’s stock trajectory, which has risen approximately 17% in 2024 after nearly doubling the previous year, reflects investor confidence in Broadcom’s business strategies and growth prospects.

In conclusion, Hock Tan’s astronomical compensation of $161.8 million in 2023 underscores the intricate dynamics of executive pay within the technology sector. While such figures may raise eyebrows regarding income inequality and fairness, Broadcom’s performance metrics and strategic achievements provide a nuanced understanding of the rationale behind Tan’s remuneration. As debates surrounding executive compensation persist, stakeholders continue to scrutinize corporate governance practices, aiming for a balance between rewarding executive leadership and ensuring equitable outcomes for all stakeholders.

Broadcom

Broadcom, Success story of the communication industry

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Semiconductors are an integral part of the broadband communication industry. Products like integrated circuits, wireless networks, cable modems are in huge demand today because of the rising efficient in existing technology and making it accessible to every corner of the world.

Pioneering in the world of communication engineering, Henry Samueli along with Henry Nicholas co-founded Broadcom Corporation in 1991. The company was built mainly to produce semiconductors and products that can contribute to today’s communication system.

The company came under the acquisition of Avago Technologies in 2016 and is currently a wholly-owned subsidiary of Broadcom Inc. Headquartered in Irvine, California; Broadcom has made more than twenty big acquisitions till date and listed as Gartner’s Top 10 Semiconductor Vendors.

Henry Samueli

Samueli’s Jewish parents moved to the United States with nothing but lucky enough to survive in the Nazi terror land. The family ran a liquor store in Los Angeles and this is where Samueli grew up. He went to Bancroft Junior High School followed by Fairfax High School.

His great interest in electronics started growing inside him since he was a child and he built a radio all by himself in junior school. He went to UCLA School of Engineering to complete his graduation and passed with all the three successive degrees from Bachelor’s to PhD from this very place.

Samueli studied Electrical Engineering and after completing his PhD he joined UCLA as a professor. This is where he met Henry Nicholas who was a PhD scholar at UCLA. Apart from being an engineer, Samueli is also a great philanthropist who is the founding director of the Samueli Foundation, a non-profit organization. Recently, Samueli has donated $100 million for the development of UCLA.

Henry Nicholas

Nicholas was born to a prosperous family in Cincinnati, Ohio. When he was four years old, his parents got divorced and he moved to Los Angeles, California with his mother and sister. Nicholas did his junior years schooling from Malibu and later went to Santa Monica High School.

Nicholas pursued his degree in Electrical Engineering from UCLA and before that went to the United States Air Force Academy. Nicholas received his Master’s degree from UCLA as well and got admitted for the PhD program under Samueli.

After completing his PhD, Nicholas moved to Cerritos and joined PairGain Technologies as Director of Microelectronics. But he left the company soon and joined his business partner who was also his advisor to co-found Broadcom.

History of Broadcom

In the beginning, both Samueli and Nicholas invested $5,000 from their pocket to start this business. They didn’t have a proper workplace and temporarily worked at Nicholas’s beach house. It’s a good thing one of them was a bit richer. After a year of rigorous hard work, both of them were finally able to rent an office in Westwood.

This was Broadcom Corporation’s first office which was shifted to Irvine three years later. The company went public in 1998 and made a kick-off start with serving more than fifteen countries around the world.

In 2009, the company was listed in the Fortune 500 and by this time Broadcom hired more than 11,000 employers. At the end of 2013, the company’s annual revenue summed up to a massive figure of $8.01 billion with its ranking coming down to 327 in Fortune 500.

Acquisitions

Broadcom has got a never-ending list of acquisitions starting from 1999. The company mainly bought other small semiconductor companies and networking companies like Maverick Networks, Epigram, Altocom, BlueSteel Networks and many more. Some biggest acquisitions before the company was sold were in 2000 and 2011. The company bought Silicon Spice and NetLogic Microsystems for $1 billion and $3.7 billion respectively.

End of an Era

The company which achieved a great deal of success for more than two decades came under the acquisition of Avago Technologies in 2015. The company was sold for $37 billion with Samueli becoming the CTO of the newly merged company and Nicholas playing the role of strategic advisor. After all the legal works were completed by February 2016, Cypress Semiconductor bought Broadcom’s entire IoT sector in May 2016. The acquisition was made for $550 million.

It was estimated that after the merging, Broadcom Inc. (present parent company) would have an estimated market value of $77 billion.

Broadcom Inc

The company was formerly known as Avago Technologies, that is, from 1961. Tan Hock Eng is the current CEO of the company with more than 15,000 employers to date. According to the records of 2018, the company’s annual revenue is $20.84 billion.