The median pay package for CEOs rose to $16.3 million, up 12.6 percent, based on data Equilar analyzed for The Associated Press. At the identical time, private-sector staff’ wages and advantages rose 4.1 percent through 2023. At half of the businesses in AP’s annual pay survey, it could take a employee in the course of the pay scale nearly 200 years to earn what their CEO earned.
“In this post-pandemic market, there is a desire for boards to reward and retain CEOs when they feel they have a good leader at their side,” says Kelly Malafis, founding partner of Compensation Advisory Partners in New York.
The AP CEO compensation survey included salary data from 341 executives at S&P 500 firms who served at their firms for at the least two full consecutive fiscal years and filed proxy statements between Jan. 1 and April 30.
Hock Tan, CEO of Broadcom, topped the AP survey with a pay package price about $162 million.
Broadcom granted Tan stock awards valued at $160.5 million for the corporate’s fiscal 12 months 2023 on Oct. 31, 2022. According to a securities filing, Tan was given the chance to buy as much as 1 million shares starting in fiscal 12 months 2025, provided Broadcom’s stock hits certain targets — and he stays CEO for five years.
At the time of the award, Broadcom stock was trading at $470. Since then, the worth has risen sharply, reaching an all-time high of $1,436.17 on May 15. Tan will receive the complete award if the common 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 return to shareholders during that period easily exceeded that of the S&P 500.
Other CEOs topping the AP survey include 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 within the AP survey for the fifth consecutive 12 months in fiscal 12 months 2023, earning $30.3 million – unchanged from her 2022 pay package. Her overall rating rose from twenty fifth to twenty first.
Since the pandemic, staff across the country have seen higher wages. According to the Labor Department, wages and advantages for personal sector staff will increase 4.1% in 2023, following a 5.1% increase in 2022.
Despite these gains, the gap between the bosses in the manager office and everybody else is widening. Half of the CEOs on this 12 months’s salary survey earned at the least 196 times the common earner, up from 185 times in last 12 months’s survey.
The gap between the CEO’s salary and that of the employees was not all the time so large.
After World War II and into the Nineteen Eighties, CEOs of enormous publicly traded firms earned about 40 to 50 times the common employee’s salary, says Brandon Rees, deputy director of corporations and capital markets on the American Federation of Labor Leaders (AFL-CIO), which runs the Executive Paywatch website that tracks CEO salaries.
“The (current) pay ratio suggests a kind of winner-take-all culture in which companies treat their CEOs like superstars rather than team players,” Rees said.
Despite the criticism, shareholders overwhelmingly support executive compensation packages. According to data from Equilar, firms typically received slightly below 90% of votes for his or her executive compensation plans between 2019 and 2023.
However, shareholders occasionally reject a compensation plan, although the votes will not be binding. In 2023, shareholders of 13 firms within the S&P 500 approved the compensation package by lower than 50%.
Sarah Anderson, director of the Global Economy Project on the progressive Institute for Policy Studies, said say-on-pay votes are essential because they “shine a spotlight on some of the most egregious cases of executive access and can lead to negotiations on pay and other issues that shareholders may want to discuss with company management.”
After investors again clearly rejected the pay packages for top executives, Netflix met with a lot of its largest shareholders last 12 months to debate their concerns.
Following the talks, Netflix announced several changes to revamp its compensation policy. For example, it eliminated executives’ ability to decide on to separate their compensation between money and options. It will not issue stock options that may earn executives a salary so long as the stock price stays above a certain level. Instead, the corporate will issue restricted shares that executives can only profit from after a certain time period or after meeting certain performance criteria.
The changes will take effect in 2024.
By and huge, votes on compensation have not made much of a difference, Anderson says. “I think the impact on the overall size of CEO compensation packages hasn’t had much of an impact in some cases.”
