The standard pay packages for CEOs overseeing S&P 500 companies surged significantly last year, outpacing worker increases amid inflation that was straining American households' finances.
Pay Gap Between CEO and Workers
Equilar, an executive data firm that assessed the salaries, bonuses, benefits, stock awards, and other remuneration elements of 341 top executives, found that median CEO pay surged by almost 13%, surpassing the 4.1% increase in wages and benefits received by private-sector workers in 2023.
The CEO compensation analysis conducted by The Associated Press covered the pay information of S&P 500 CEOs who have held positions for at least two full consecutive fiscal years, with proxy statements filed between January 1 and April 30. In addition to revealing the increasing disparity in compensation between CEOs and their employees, the study also emphasizes the ongoing gender inequality issue, highlighting the fact that women continue to represent only a small fraction of those holding chief executive roles compared to men.
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The median pay package for CEOs was $16.3 million last year, a 12.6% increase from 2022. This represents a midpoint where half of the CEOs earned more than this amount while the other half earned less.
In half of the companies surveyed this year, the disparity between CEOs and the rest of the employees continues to grow. Where the median worker would need nearly 200 years to earn what their CEO makes, which is 196 times more than their median employee, an increase from 185 times the previous year; for instance, a Ross Stores part-time retail store associate with $8,618 earnings would take 2,100 years to match CEO Barbara Rentler's 2023 compensation of $18.1 million, and 1,137 years for the previous year to achieve parity with the CEO's pay.
Gender Disparity in Compensation
Only 25 of the 341 CEOs analyzed in the AP's annual compensation survey are women. Although this represents the highest number of women on the list since the survey's inception in 2011, the figures have seen little change overall. The second-highest count was 21 women in 2017.
Female CEOs saw a notable increase in median pay packages, rising by 21% to $17.6 million, surpassing the 12.2% increase seen by their male counterparts, whose median pay package reached $16.3 million.
AP Survey's Highest-Paid CEOs
Hock Tan, CEO of Broadcom Inc., claimed the top spot in the AP survey with a staggering pay package valued at approximately $162 million. On October 31, 2022, Broadcom awarded Hock Tan stock awards valued at $160.5 million for the company's 2023 fiscal year. According to a securities filing, Tan has the opportunity to earn up to 1 million shares starting in the fiscal year 2025, provided that Broadcom's stock meets specific targets and he continues to serve as CEO for five years.
Lisa Su, the CEO and chair of the board at chipmaker Advanced Micro Devices, retained her position as the highest-paid female CEO in the AP survey for the fifth consecutive year in fiscal 2023, with a total compensation remaining steady at $30.3 million compared to the previous year. Despite this consistency, her ranking improved from 25th to 21st overall. Su's compensation package included a base salary of $1.2 million and a performance bonus exceeding $1.4 million. Most of her package, $21.8 million, consisted of stock awards.
Many companies respond to shareholder demands by aligning CEO compensation with performance. Consequently, a significant portion of CEO pay packages now comprises stock awards, which often come with restrictions. This means the CEO cannot access them immediately or sometimes at all unless the company meets specific company targets, such as achieving a higher stock price or market value or improving operating profits.
Last year, the median stock award increased nearly 11%, while bonuses rose 2.7%, more modestly.
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