CEO raises slowed but still are ‘off the charts’
After two year of gargantuan gains, top executive pay up 0.9% — but it would still take workers 186 years to hit total
After ballooning for years, CEO pay growth is finally slowing.
The typical compensation package for chief executives who run S&P 500 companies rose just 0.9% last year, to a median of $14.8 million, according to data analyzed for The Associated Press by Equilar. That means half the CEOs in the survey made more and half made less. It was the smallest increase since 2015.
Still, that’s unlikely to quell mounting criticism CEO pay has become excessively high and the imbalance between company bosses and rank-and-file workers too wide. Discontent over that gap has helped fuel labor unrest, and even some institutional investors have pushed back against a few of the most eye-popping packages.
The smaller increase came after CEO pay soared 17% in 2021, when boards rewarded top executives handsomely for steering their companies through the pandemic-induced recession.
Many of the compensation packages were approved early in 2022, but even a small raise might seem lavish in retrospect against the backdrop of a year in which stock markets tanked to their worst performance since 2008, inflation erased wage gains, fears of a recession grew and tech giants began laying off workers.
“I’m not surprised that after two record years in a row, pay hikes cooled somewhat,” said Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies. “What we shouldn’t lose sight of is that CEO pay is still off the charts by historical measures.” She said even a small hike last year was “outrageous.”
In contrast to recent years, CEO pay gains were lower than the 5.1% increase in wages and benefits netted by private-sector workers through 2022.
Still, worker pay failed to keep up with inflation, which was sitting at 6.4% at the end of last year. And the pay disparity between CEOs and rank-and-file workers, which has been widening for years, narrowed only slightly.
The median pay for workers at companies included in the AP survey was $77,178, up 1.3% from $76,160 the previous year. That means it would take that worker 186 years to make what a CEO making the median pay earned just last year.
The timing of some of the biggest pay packages struck a discordant note against the backdrop of difficult times for their industries.
Alphabet’s CEO, Sundar Pichai, ranked No. 1 in the survey this year with a package valued at nearly $226 million.
Pichai received a total compensation package 15 times higher than this year’s median CEO pay just before Google laid off tens of thousands of workers. The company’s total shareholder returns fell 39% last year.
Stephen McMurtry, a Google software engineer and member of the Alphabet Workers Union-CWA, said he was not impressed when Pichai told employees shortly after the layoffs executives would take significant bonus cuts in 2023 because “bonuses are a small part of executives’ primarily stock-based compensation.”
“The clear disparity between executive rewards and our jobless former coworkers erodes trust and further underscores the need for transparency,” McMurtry said.