NEW YORK — A typical compensation package for a chief executive who runs a company in S&The P 500 jumped nearly 13% last year, easily outpacing gains for workers as inflation puts heavy pressure on America’s budget.
The average salary package for CEOs rose to $16.3 million, up 12.6%, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits received by private workers will increase by 4.1% until 2023. In half of the companies in the AP annual salary survey, it will take workers in the middle of the company’s salary scale almost 200 years to make what the CEO does.
“In this post-pandemic market, the desire is for places to reward and retain CEOs when they feel they have good leadership,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York.
The AP CEO compensation survey includes salary data for 341 executives in S&P 500 companies that have served at least two full consecutive fiscal years in the company, which filed proxy statements between January 1 and April 30.
Hock Tan, CEO of Broadcom, topped the AP survey with a pay package valued at about $162 million.
Broadcom awarded Tan shares worth $160.5 million on October 31, 2022, for the company’s 2023 fiscal year. Tan was given the opportunity to acquire up to 1 million shares starting in fiscal 2025, according to a securities filing, if Broadcom’s stock meets certain targets — and he remains CEO for five years.
At the time of the award, Broadcom shares were trading at $470. The stock has skyrocketed since, and reached 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 notes that in Tan the market value has increased from $3.8 billion in 2009 to $645 billion (as of May 23) and the total shareholder return at that time easily exceeded S.&P500.
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 compensation worth $30.3 million – flat with her compensation package in 2022. rising to 21 out of 25.
Workers across the country have seen higher pay since the pandemic, with wages and benefits for private sector employees rising 4.1% in 2023 after rising 5.1% in 2022, according to the Labor Department.
Even with these benefits, the gap between the person in the corner office and everyone else is widening. Half of the CEOs in this year’s salary survey make at least 196 times the average employee. That’s up from 185 times in last year’s survey.
The difference between what the chief executive does and what the workers do is not necessarily wide.
After World War II and into the 1980s, CEOs of large publicly traded companies made about 40 to 50 times the average worker’s salary, said Brandon Rees, deputy director of corporate and capital markets for the AFL-CIO, which runs the Executive Paywatch website. . which tracks CEO pay.
“(Today’s) payout ratio signals that the winner takes all culture, that the company views the CEO as, you know, a superstar rather than, a team player,” Rees said.
Despite criticism, shareholders tend to give overwhelming support to pay packages for company leaders. From 2019 to 2023, companies typically receive just under 90% of votes for executive compensation plans, according to data from Equilar.
However, shareholders sometimes reject compensation plans, even if the vote is not binding. In 2023, shareholders in 13 companies in S&P 500 gives a pay 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 spotlight on some of the most difficult cases of executive access, and can lead to negotiations on pay and other issues that shareholders may have want to raise it with company leaders.
After investors gave another thumbs up to pay packages for top executives, Netflix met with many of its biggest shareholders last year to discuss the issue.
After the discussion, Netflix announced some changes to redesign its payment policy. For one, it eliminates the executive’s choice of compensation between cash and options. It will no longer grant stock options, which can pay executives as long as the stock price stays above a certain level. However, companies will grant restricted stock so that executives can earn profits only after a certain period of time or after certain performance measures are met.
The changes will take effect in 2024.
More broadly, speaking on the paid vote has not made a big difference, Anderson said. “I think the impact, of course, on the overall size of the CEO’s package doesn’t have much impact in some cases.”
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Ortutay reported from San Francisco. Reporters Stan Choe and Ken Sweet contributed.
