CEO pay rose 17% in 2021 as profits soared; workers trailed
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 The Associated Press by Equilar.
The gain towers over the 4.4% increase in wages and benefits netted by privatesector 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 as 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 eyepopping 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 rankand-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.
At Walmart, for example, the company said its median associate made $25,335 in compensation last year. That means half its workers made more, and half made less.
That’s up 21% from $20,942 a year earlier and came as the company’s average hourly wage for U.S. associates rose from $14.50 in January 2021 to more than $17 currently. That increase was bigger than the raise CEO Doug McMillon got, on a percentage basis. But his 13.7% raise netted him a total package valued at $25.7 million.
Anger is growing over such an imbalance. Surveys suggest Americans across political parties see CEO pay as too high, and some investors are pushing back.
Workers are trying to organize unions across the country, and the “Great Resignation” has emboldened millions to quit to find better jobs elsewhere. The U.S. government counted more than 4 million quits during April 2021 alone, the first time that happened. The monthly number has since topped 4.5 million twice.
“That is going to add a huge cost to corporate bottom lines, to have these kind of turnover rates,” said Sarah Anderson, director of the global economy project at the progressive Institute for Policy Studies.
“They should be thinking about what kind of message they’re sending to those people, about whether they’re really valued in their jobs,” Anderson said. “When the guy in the corner office is making several hundred if not thousands of times more, that’s sending a really demoralizing message.”