by NEW YORK (AP) – The average compensation package for chief executives who run companies in the S&P 500 jumped nearly 13% last year, easily outpacing gains for workers at a time when inflation was putting a heavy strain on Americans’ budgets.
The median pay package for CEOs rose to $16.3 million, a 12.6% increase, according to data analyzed by Equilar for The Associated Press. Meanwhile, net wages and benefits for private sector workers rose 4.1% through 2023. At half of the companies in the AP’s annual wage survey, it would take nearly 200 years for the worker in the middle of the company’s pay scale to reach made his CEO to do.
“In this post-pandemic market, the desire for boards to reward and retain CEOs is when they feel they have a good leader in place,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York.
The AP CEO compensation survey included pay data for 341 executives at S&P 500 companies who served at least two full consecutive fiscal years at their companies, who filed proxy statements between Jan. 1 and April 30.
Broadcom CEO Hock Tan topped the AP survey with a pay package worth 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 was given the opportunity to earn up to 1 million shares starting in fiscal 2025, according to a securities filing, provided Broadcom’s stock meets certain goals — and he remains CEO for five years.
At the time of the award, Broadcom stock was trading at $470. The stock has skyrocketed since then, reaching an all-time high of $1,436.17 on May 15. Tan will receive the full award if the average closing price is at or above $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 time easily exceeded that of the S&P 500.
Other CEOs at the top of the AP survey are 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).
Lisa Su, CEO of chipmaker Advanced Micro Devices, was the highest-paid female CEO in the AP survey for the fifth year in a row in fiscal 2023, bringing in $30.3 million in compensation — equal to her compensation package in 2022. rose to 21 out of 25.
Workers across the country are winning higher wages from the pandemic, with wages and benefits for private sector employees expected to rise 4.1% in 2023 after a 5.1% increase in 2022, according to the Labor Department.
Even with these gains, the gap between the person in the corner office and everyone else continues to widen. Half of the CEOs in this year’s pay survey made at least 196 times what their median employee earned. That’s up from 185 times in last year’s survey.
The difference between what the chief executive makes and what the workers earn has not always been so wide.
After World War II and up until the 1980s, CEOs of large publicly traded companies made about 40 to 50 times the average worker’s pay, said Brandon Rees, deputy director of corporations and capital markets for the AFL-CIO, which runs Paywatch Executive website. which tracks CEO pay.
“The (current) pay ratio is a sign that the whole culture is going for a winner, that companies are treating their CEOs as, you know, superstars rather than team players,” Rees said.
Despite the criticism, shareholders tend to overwhelmingly support pay packages for company leaders. From 2019 to 2023, companies typically received just under 90% of the vote for their executive compensation plans, according to data from Equilar.
From time to time, however, shareholders reject a compensation plan, even though the votes are non-binding. In 2023, shareholders at 13 companies in the S&P 500 supported less than 50% of the pay package.
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 “highlight some of the most significant cases of executive access, and that negotiations could lead to wages and wages. other issues that the shareholders may wish to raise with the corporate leadership.”
After its investors gave another thumbs up to the pay packages of its chief executives, Netflix met with many of its largest shareholders last year to discuss their concerns.
After the talks, Netflix announced some changes to redesign its pay policies. In one case, it eliminated the option for executives to allocate their compensation between cash and options. It will no longer issue stock options, which can give executives a payday as long as the stock price stays above a certain level. Instead, the company will grant restricted stock that executives can only profit from after a certain amount of time or after meeting certain performance measures.
The changes will come into effect in 2024.
More broadly, say pay votes haven’t made much of a difference, Anderson says. “I think the impact, certainly on the overall size of the CEO packages in some cases, has not been significant.”
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Ortutay reported from San Francisco. Reporters Stan Choe and Ken Sweet contributed.
