06-13-2024
The income gap between CEOs and employees continues to grow. According to The Associated Press and Equilar, S&P 500 companies paid the median CEO 196 times the median employee earnings in 2023. The ratio was 185 times in 2022. The average CEO pay rose to $16.3 million in 2023, a 12.6% increase, with the few women in those ranks receiving higher bumps on average. For context, the average CEO pay rose just 0.9% for 2022. CEO pay, tied to stock performance, is increasing much faster than for employees.
This information may be frustrating for employees struggling to pay bills because of economic inflation. U.S. workers spend $1,015 more per month than they did in 2021 for the same goods and services. The head of a firm advising boards on corporate governance told CNN that boards and CEOs "remain tone deaf" on enormous pay packages. She said if workers do not share in financial success, the good ones will "take action and vote with their feet."
Broadcom pays its CEO the highest amount in the S&P 500 at a value of $161.8 million. That salary is 510 times the median salary of his employees at the company. The company's share price doubled last year. For retail CEOs, the disparity is even higher. Ross Store's CEO earned $18.1 million in total compensation, while the median Ross employee (part-time and paid hourly) earned $8,618, which means the CEO earned 2,100 times as much. AP notes that corporate boards feel pressure to keep CEO salaries up to encourage them to stay. They focus on paying competitive rates rather than pay ratios within their internal ranks. Until the 1980s, CEOs made about 40 to 50 times the average worker’s salary.