CEO compensation experienced a significant increase of close to 10% in 2024, mirroring the surge in stock market values and corporate profits.
In 2024, the compensation for S&P 500 CEOs saw a notable surge, with median remuneration rising significantly compared to prior years and outpacing employee wage growth.
Chief executives' income packages jumped nearly 10% to an estimated $17.1 million last year, propelled by stock-based incentives and strong market performance[1][4]. The increase in CEO pay was marked, especially considering the median employee salary saw only a slight uptick of 1.7%[1].
A substantial proportion of CEO pay packages comprised long-term incentives, particularly stock awards, as companies answered calls for a closer link between executive compensation and performance[1]. For instance, Rick Smith of Axon Enterprises pocketed a staggering $164.5 million, largely through such incentives[1].
In terms of gender, female CEOs saw a noteworthy median pay increase of 10.7%, slightly surpassing the 9.7% gain for their male counterparts[1].
The widening compensation gap is evident in the CEO-to-employee pay ratio, which rose to approximately 192:1 in 2024 from 186:1 the previous year[1]. This suggests ongoing concerns surrounding income inequality.
While employee pay increased modestly, it would take a median worker almost 192 years to earn what a CEO makes in a single year at many S&P 500 companies[1]. This disparity underscores ongoing debates about income disparities within these companies[1][2][4].
Other key aspects of the survey's findings include:
- Among top earners, Rick Smith of Axon Enterprises led at $164.5 million, followed by Lawrence Culp of GE Aerospace ($87.4 million), Tim Cook at Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million), and Ted Sarandos at Netflix ($61.9 million)[1].
- Companies in industries with traditionally lower wages tend to exhibit higher pay ratios. For instance, the CEO-to-median-worker pay ratio at cruise line company Carnival Corp. reached nearly 1,300:1, and McDonald's CEO made approximately 1,000:1 more than the median worker[1].
- Wages and benefits for private-sector workers in the U.S. grew 3.6% in 2024, according to the Labor Department. The average worker in the U.S. made $65,460 per year, and this figure rose to $92,000 when benefits were taken into account[1].
In conclusion, the 2024 CEO compensation landscape among S&P 500 companies was characterized by substantial growth in median pay, primarily driven by stock-based incentives. Despite some incremental gains for female CEOs and a slight increase for employees, the persisting wage gap highlights ongoing concerns about income inequality[1][2][4].
[1] - The Associated Press, AP News, AP CEO Compensation Survey, 2024.[2] - Equilar, 2024 S&P 500 Executive Compensation Facts, 2024.[3] - Institute for Policy Studies, Global Economy Project.[4] - Compensation Advisory Partners, various reports and interviews, 2024.
- The government could consider implementing stricter regulations on executive compensation in large businesses to address the widening income inequality evident in the CEO-to-employee pay ratio.
- In Seattle, a city known for technology giants like Microsoft and Amazon, the rise in CEO compensation may have an impact on the overall health care and financial issues the city faces due to the influx of high-earning executives.
- The economy could benefit from more equitable distribution of wealth, such as a reduction in the substantial gap between CEO pay and median employee wages, as suggested by the ongoing debates about income disparities within S&P 500 companies.
- As Seattle continues to attract major businesses, it would be beneficial to invest in affordable health care options and education to help alleviate the potential negative effects of high executive pay on the local community.
