CEOs get hefty pay hikes in US
Median pay package of chiefs at S&P-500 cos was $16.3 mn, up 12.6% in 2023
image for illustrative purpose
It would take the worker at the middle of the company’s pay scale almost 200 years to make what their CEO did, according to data analyzed for The Associated Press by Equilar
New York: The typical compensation package for chief executives, who run companies in the S&P-500 jumped nearly 13 per cent last year, easily surpassing the gains for workers at a time when inflation was putting considerable pressure on Americans’ budgets.
The median pay package for CEOs rose to $16.3 million, up 12.6 per cent, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits netted by private-sector workers rose 4.1 per cent through 2023. At half the companies in this year’s pay survey, it would take the worker at the middle of the company’s pay scale almost 200 years to make what their CEO did. CEOs got rewarded as the economy showed remarkable resilience, underpinning strong profits and boosting stock prices. After navigating the pandemic, companies faced challenges from persistent inflation and higher interest rates. About two dozen CEOs in the AP’s annual survey received a pay bump of 50 per cent or more.
“In this post-pandemic market, the desire is for boards to reward and retain CEOs when they feel like they have a good leader in place,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York.
“That all combined kind of leads to increased compensation.” But Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, believes the gap in earnings between top executives and workers plays into the overall dissatisfaction among Americans about the economy.
“Most of the focus here is on inflation, which people are really feeling, but they’re feeling the pain of inflation more because they’re not seeing their wages go up enough,” she said.
Many companies have heeded calls from shareholders to tie CEO compensation more closely to performance. As a result, a large proportion of pay packages consist of stock awards, which the CEO often can’t cash in for years, if at all, unless the company meets certain targets, typically a higher stock price or market value or improved operating profits. The median stock award rose almost 11 per cent last year compared to a 2.7 per cent increase in bonuses. The AP’s CEO compensation study included pay data for 341 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between Jan. 1 and April 30. Hock Tan, the CEO of Broadcom Inc., topped the AP survey with a pay package valued at about $162 million. Broadcom granted Tan stock awards valued at $160.5 million on October 31, 2022, for the company’s 2023 fiscal year.
