Data: CEO pay rose 17.1% in ’21 while profits soared

Private-sector workers saw a 4.4% hike that failed to keep up with inflation

NEW YORK — Even when regular workers win their biggest raises in decades, they look minuscule compared with what CEOs are getting.

The typical compensation package for chief executives who run S&P 500 companies soared 17.1% last year, to a median $14.5 million, according to data analyzed for Associated Press by Equilar.

The gain towers over the 4.4% increase in wages and benefits netted by private-sector workers through 2021, which was the fastest on record going back to 2001. The raises for many rank-and-file workers also failed to keep up with inflation, which reached 7% at the end of last year.

CEO pay took off as stock prices and profits rebounded sharply when the economy roared out of its brief 2020 recession. Because much of a CEO’s compensation is tied to such performance, their pay packages ballooned after years of mostly moderating growth.

In many of the most eye-popping packages, such as Expedia Group’s, valued at $296.2 million and JPMorgan Chase’s $84.4 million, boards gave particularly big grants of stock or stock options to recently appointed CEOs navigating their companies through the pandemic or to established leaders they wanted to convince to hang around.

The CEOs often can’t cash in on such stock or options for years, or possibly ever, unless the company meets performance targets. But companies still must disclose estimates for how much they’re worth. Only about a quarter of the typical pay package for all S&P 500 CEOs last year came as actual cash they could pocket.

Whatever its composition, the chasm in pay between CEOs and the rank-and-file workers they oversee keeps widening. At half the companies in this year’s pay survey, it would take the worker at the middle of the company’s pay scale at least 186 years to make what their CEO did last year. That’s up from 166 a year earlier.

Gains for CEO pay had been slowing in recent years, with the median rise easing from 8.5% in 2017 to 4.1% in 2019. It ticked back up to 5% in 2020, which was a complicated year because the pandemic shut down the economy and profits at many companies tanked.

For 2020, many companies rejiggered the intricate formulas they created to determine their CEOs’ pay. The tweaks made up for losses caused by the pandemic, something many boards said was an extraordinary event outside the CEO’s control.

Then came 2021. Thanks to a reopened economy, super-low interest rates from the Federal Reserve and other factors, stock prices soared and the S&P 500 jumped nearly 27%, setting records through the year. Earnings per share soared roughly 50%.

Throughout the year, CEOs had to navigate snarled supply chains and shortages of chips and other key materials that affected businesses across industries, said Dan Laddin, a partner at Compensation Advisory Partners, a consulting firm that works with boards.