In 2023, CEOs in the S&P 500 received significantly higher pay packages compared to their employees, with the median CEO being paid 196 times more than the median employee. This gap has been widening, as CEO pay has been increasing at a faster rate than employee pay, leading to frustration among workers struggling to keep up with the rising cost of living. In 2023, CEO compensation saw a significant increase of 12.6%, reaching a median total of $16.3 million, while employee pay only saw a 5.2% increase to $81,467.
As workers continue to face high costs for various expenses, such as groceries, daycare, and insurance, they are feeling the impact of three years of high inflation. While paychecks are now growing faster than prices, workers are still feeling the cumulative effects of previous years. Despite the positive turnaround, with incomes increasing by $1,109 per month, the additional costs are almost canceling out the gains, as Americans are spending $1,015 more per month on the same goods and services compared to 2021, according to Moody’s Analytics.
The majority of CEO pay in the S&P 500 comes from stock awards, which accounted for about 70% of total compensation in 2023. With the stock market performing strongly, median stock awards for CEOs increased by 10.7% to $9.4 million. The stock market soared in 2023, with the S&P 500 and Nasdaq registering significant gains. This trend has continued into 2023, with the S&P 500 climbing 11% since the start of the year, hinting at even larger CEO pay packages in the future.
Some CEOs, such as Broadcom’s Hock Tan and FICO’s William Lansing, received exceptionally high pay last year, with Tan earning $161.8 million, mostly from stock awards, after the company’s share price doubled. These payouts far exceeded the median salary of employees at their respective companies. The pay gap is even more pronounced in companies with hourly, part-time workers, such as Ross Stores, where CEO Barbara Rentler made $18.1 million compared to the median employee’s pay of $8,618, a difference of 2,100 times.
As the stock market continues to soar and CEO pay outstrips that of employees, the increasing disparity is raising concerns among workers facing the challenges of high inflation and stagnant wages. While CEOs are benefiting from rising stock prices and generous stock awards, employees are struggling to cover their living expenses. The glaring pay gap between CEOs and workers highlights the need for companies to address income inequality and ensure fair compensation practices to promote a more equitable work environment.
