Chief executives of S&P 500 companies saw their compensation packages surge by nearly 13% last year, significantly outpacing the wage increases of average workers amid rising inflation. According to data analyzed by Equilar for The Associated Press, the median CEO pay package rose to $16.3 million, marking a 12.6% increase. In contrast, private-sector workers’ wages and benefits grew by just 4.1% in 2023. At half of the companies surveyed, a median employee would need almost 200 years to match what their CEO earned in one year.
CEOs benefited from a resilient economy, which bolstered profits and stock prices despite the ongoing challenges of inflation and higher interest rates. Notably, around two dozen CEOs in the survey saw their pay increase by 50% or more. Kelly Malafis, founding partner of Compensation Advisory Partners, noted that boards are eager to reward and retain effective leaders in the post-pandemic market, contributing to the rise in executive compensation.
However, Sarah Anderson from the Institute for Policy Studies pointed out that the growing earnings gap between executives and workers is fueling widespread economic dissatisfaction. She emphasized that while inflation is a significant concern, the lack of corresponding wage growth exacerbates the financial strain on workers.
Many companies have responded to shareholder demands by linking CEO compensation more closely to performance. Consequently, a significant portion of CEO pay packages now consists of stock awards, which are often contingent on the company meeting specific targets such as higher stock prices or improved profits. Last year, the median stock award for CEOs increased by nearly 11%, while bonuses saw a modest rise of 2.7%.
The AP’s study included compensation data for 341 executives from S&P 500 companies who had served at least two consecutive fiscal years and filed proxy statements between January 1 and April 30.
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