NEW YORK — The typical compensation package for chief executives running companies in S.&OP 500 jumped nearly 13% last year, easily outpacing earnings for workers at a time when inflation was putting considerable pressure on Americans’ budgets.
The average pay package for CEOs rose to $16.3 million, a 12.6% increase, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits compensated by private sector workers have increased 4.1% through 2023. At half of the companies included in the AP’s annual wage survey, it would take the worker in the middle of the company’s pay scale nearly 200 years to make the cut. that your CEO did.
“In this post-pandemic market, the desire is for boards to reward and retain CEOs when they feel they have a good leader in place,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York.
AP’s CEO compensation survey included salary data from 341 executives in S.&P 500 companies that have served at least two consecutive full fiscal years in their companies, which presented powers of attorney between January 1 and April 30.
Hock Tan, CEO of Broadcom, topped the AP survey with a compensation 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. Tan had the opportunity to earn up to 1 million shares starting in fiscal 2025, according to a securities filing, as long as Broadcom shares meet certain targets — and he remains CEO for five years.
At the time of the awards, Broadcom shares were trading at $470. The stock has soared since then and reached an all-time high of $1,436.17 on May 15. Tan will receive the full premium if the average closing price is at or above US$1,125 for 20 consecutive days between October 2025 and October 2027.
Broadcom noted that under Tan its market value increased from $3.8 billion in 2009 to $645 billion (as of May 23) and that its total shareholder return during that period easily surpassed S’s.&P500.
Other CEOs at the top of the AP survey are William Lansing of Fair Isaac Corp. ($66.3 million); Apple Inc.’s Tim Cook ($63.2 million); Hamid Moghadam of Prologis Inc. ($50.9 million); and Ted Sarandos, co-CEO of Netflix ($49.8 million).
Lisa Su, CEO of chipmaker Advanced Micro Devices, was the highest-paid female CEO in the AP survey for the fifth consecutive year in fiscal 2023, bringing in compensation valued at $30.3 million – equal to her salary package. salary in 2022. His overall rating rose from 25 to 21.
Workers across the country have been earning higher wages since the pandemic, with private sector employee wages and benefits increasing 4.1% in 2023, following a 5.1% increase in 2022, according to the Department of Labor.
Even with these gains, the distance between the person in the central office and everyone else continues to increase. Half of the CEOs included in this year’s salary survey earned at least 196 times the average salary of their employees. This represents a 185-fold increase on last year’s survey.
The disparity between what the chief executive earns and what workers earn has not always been so great.
After World War II and until the 1980s, CEOs of large publicly traded companies earned about 40 to 50 times the average worker’s salary, said Brandon Rees, deputy director of corporations and capital markets at the AFL-CIO. , which runs an Executive Paywatch website. that tracks CEO pay.
“The (current) pay ratio signals a kind of winner-takes-all culture, that companies are treating their CEOs as, you know, as superstars rather than team players,” Rees said.
Despite criticism, shareholders tend to be overwhelmingly supportive of company leaders’ compensation packages. From 2019 to 2023, companies typically received just under 90% of votes for their executive compensation plans, according to data from Equilar.
However, shareholders occasionally reject a compensation plan, although the votes are not binding. In 2023, shareholders of 13 companies in S&P500 gave the salary package less than 50% support.
Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, said the Say on Pay votes are important because they “shine a light on some of the most egregious cases of executive access, and can lead to negotiations over pay and other issues that shareholders might want to raise with corporate leadership.”
After its investors gave another resounding denial to its top executives’ pay packages, Netflix met with many of its biggest shareholders last year to discuss their concerns.
After the negotiations, Netflix announced several changes to redesign its salary policies. On the one hand, it eliminated executives’ choice to allocate their compensation between cash and options. It will no longer give stock options, which could give executives a payday as long as the stock price remains above a certain level. Instead, the company will give restricted shares that executives can profit from only after a certain period of time or after certain performance measures are met.
The changes will come into effect in 2024.
More broadly, let’s say the salary votes didn’t make a big difference, says Anderson. “I think the impact, certainly on the overall size of CEO packages, has not had much of an effect in some cases.”
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Ortutay reported from San Francisco. Reporters Stan Choe and Ken Sweet contributed.
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