The median compensation package for CEOs of the largest US firms jumped by 12.6% to $16.3 million in 2023, data shows
Top bosses of the largest US firms earned 200 times more than their employees last year, research shows
Chief executives of the largest American companies saw their income grow at a significantly faster rate than that of their workers last year, the Associated Press (AP) news agency has reported, citing data analysis from a study conducted in partnership with business intelligence firm Equilar. It comes as numerous polls have suggested that many Americans are struggling with the rising cost of rent and groceries.
The median total compensation package for CEOs who run firms in the S&P 500 jumped by 12.6% to $16.3 million in 2023, according to the study. The median earnings of S&P 500 employees rose by 5.2% from 2022 to just under $81,500. Total compensation includes salary, bonuses, stock, and other forms of compensation that top managers receive.
According to the study, the highest-paid CEO is Hock E. Tan of semiconductor developer and manufacturer Broadcom, who made $161.8 million in 2023. He was followed by William J. Lansing of Fair Isaac Corporation, a data analytics company focused on credit scoring services, who received total compensation of $66,349,962. Apple’s Tim Cook was third with $63,209,845.
The increase in compensation has been attributed to pressure on corporate boards to keep raising the pay for well-performing CEOs in order to keep them with the company.
In 2023, top managers earned roughly 200 times more than their workers, but the gap wasn’t always so wide, AP notes. Up until the 1980s, CEOs made about 40 to 50 times the average worker’s pay, the agency says.
“The [current] pay ratio signals a sort of a winner-takes-all culture, that companies are treating their CEOs as… superstars as opposed to team players,” said Brandon Rees, whose company runs CEO-pay-tracking website Executive Paywatch, as quoted by AP.
The jump in top manager compensation packages comes as the US government continues to grapple with stubborn inflation. The consumer price index has come down from the 40-year high of 7.1% reached in 2022 following the coronavirus pandemic and the energy crisis caused by Western sanctions on Russia. However, the current 3.4% is still higher than the 2% target set by the Federal Reserve.
The gap in earnings between top executives and workers in the US plays into the overall dissatisfaction among Americans about the economy, according to Sarah Anderson from the Institute for Policy Studies.
“Most of the focus here is on inflation, which people are really feeling, but they’re feeling the pain of inflation more because they’re not seeing their wages go up enough,” she told AP.
A poll carried out in the US earlier this year showed that 51% of Americans described the country’s economic conditions as poor.
Other research suggested that elevated inequality, rising prices and a widespread lack of affordable housing were contributing to a downbeat sentiment among the American population.
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