200-to-1: Gap between CEOs and workers grew even wider in 2023, analysis finds

Despite inflationary pressures, CEO compensation in the S&P 500 soared nearly 13% in 2023, further widening the pay gap with average workers.


The disparity between CEO and worker pay has reached new heights, with the typical compensation package for chief executives in the S&P 500 jumping nearly 13 percent last year. This stark contrast comes at a time when inflation has put considerable pressure on American households, exacerbating the economic strain on the average worker.

The median pay package for CEOs rose to $16.3 million, marking a 12.6 percent increase, according to data analyzed by Equilar for The Associated Press. Meanwhile, private-sector workers saw their wages and benefits increase by just 4.1 percent through 2023. At half of the companies surveyed, it would take the median worker nearly 200 years to earn what their CEO makes in a single year.

Economic resilience post-pandemic underpinned strong corporate profits and boosted stock prices, leading to hefty rewards for CEOs. Despite challenges from persistent inflation and higher interest rates, about two dozen CEOs in the annual survey received pay increases of 50 percent 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.”

However, the growing gap between executive and worker pay contributes to widespread dissatisfaction among Americans about the economy. Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, argues that this disparity amplifies the economic hardship felt by the average worker. “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 responded to shareholder calls to tie CEO compensation more closely to performance, resulting in a significant portion of pay packages consisting of stock awards. These awards often cannot be cashed in for years and are contingent on meeting specific targets, such as higher stock prices or improved operating profits. Last year, the median stock award rose by almost 11 percent, while bonuses saw a modest 2.7 percent increase.

The AP’s CEO compensation study included data for 341 executives at S&P 500 companies who have served at least two full consecutive fiscal years. Hock Tan, CEO of Broadcom Inc., topped the survey with a pay package valued at about $162 million. Broadcom granted Tan stock awards valued at $160.5 million, giving him the opportunity to earn up to 1 million shares starting in fiscal 2025, provided the company’s stock meets certain targets.

At the time of the award, Broadcom’s stock was trading at $470. Tan would receive portions of the stock awards if the stock hit $825 and $950, with the full award contingent on the stock maintaining an average closing price of at least $1,125 for 20 consecutive days between October 2025 and October 2027. These targets, once considered ambitious, now seem achievable as Broadcom’s stock reached an all-time high of $1,436.17 on May 28.

Like rival Nvidia Inc., Broadcom is capitalizing on the artificial intelligence frenzy among tech companies. Its chips are used by major banks, retailers, telecom operators, and government bodies. Under Tan’s leadership, Broadcom’s market value has soared from $3.8 billion in 2009 to $645 billion as of May 23, with its total shareholder return far exceeding that of the S&P 500.

Other top earners in the survey include William Lansing of Fair Isaac Corp ($66.3 million), Tim Cook of Apple Inc. ($63.2 million), Hamid Moghadam of Prologis Inc. ($50.9 million), and Ted Sarandos, co-CEO of Netflix ($49.8 million). Notably, Cook’s compensation represented a 36 percent decline from the previous year after he requested a pay cut following shareholder disapproval.

The survey excluded some high-profile CEOs, such as Nikesh Arora of Palo Alto Networks and Christopher Winfrey of Charter Communications, due to the timing of their compensation filings. Although Elon Musk received no compensation as CEO of Tesla Inc., his pay package remains a focal point. Musk is seeking shareholder approval to restore a pay package that a Delaware judge struck down due to a flawed approval process. Valued at $2.3 billion when granted in 2018, Musk’s pay package is now estimated to be worth around $45 billion.

While workers have seen some wage gains since the pandemic, the gap between executive and worker pay continues to widen. The median worker’s compensation at companies like Ross Stores underscores this disparity. At Ross, a part-time retail associate earned $8,618 in 2023, meaning it would take 2,100 years for that worker to match CEO Barbara Rentler’s $18.1 million compensation.

Corporate boards often justify high CEO pay by citing the need to retain top talent. They focus on competitive compensation within the industry rather than the pay ratio between executives and workers. Historically, CEOs of large publicly traded companies earned about 40 to 50 times the average worker’s pay. Today, the ratio signals a “winner-take-all” culture, treating CEOs as superstars rather than team players, according to Brandon Rees, deputy director of corporations and capital markets for the AFL-CIO.

Despite criticism, shareholders typically support executive pay packages. From 2019 to 2023, companies received nearly 90 percent approval for their compensation plans. However, some companies, like Netflix, have faced shareholder pushback, leading to changes in pay policies. In 2024, Netflix will eliminate stock options and instead offer restricted stock tied to performance measures.

More women made the list of top-paid CEOs in 2023, yet their numbers remain small compared to men. Lisa Su of Advanced Micro Devices was the highest-paid female CEO for the fifth consecutive year, earning $30.3 million. The median pay for female CEOs rose 21% to $17.6 million, outpacing their male counterparts’ 12.2 percent increase.

“Say on Pay votes are important because they shine a spotlight on some of the most egregious cases of executive excess,” Anderson said. “But the overall size of CEO packages has not seen much effect in some cases.”


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