/cloudfront-us-east-1.images.arcpublishing.com/gray/4VKYQ6YLEJCO3MXDV5MEBFHCEM.jpg "Directors received a small raise. The typical worker still takes two lives to earn his annual salary (1)")
backAssociated Press
Published: May. Feb 31, 2023 at 5:38 am CDT|Updated: 10 hours ago
(AP) — After years of progress, CEO pay growth is finally slowing.
Typical compensation packages for CEOs of S&P 500 companies rose just 0.9% last year to an average of $14.8 millionData analyzed for The Associated PressProvided by Equilar. This means that half of the CEOs surveyed are higher paid and the other half are lower paid. This was the smallest increase since 2015.
Still, that's unlikely to quell growing criticism that CEO pay is too high and that the imbalance between company bosses and rank-and-file workers is too great. Dissatisfaction with the gap has led to labor unrest and even some institutional investors rejecting some of the more high-profile proposals.
Smaller increase after CEO17% salary increase in 2021, as the board generously rewarded top executives who steered the company through the pandemic-induced recession.
Many compensation packages were approved in early 2022, but with the stock market falling, even a small increase may seem extravagant in hindsightWorst result since 2008, inflation offsets wage growth, recession fears mount, and tech giants start laying off workers.
"I'm not surprised that wage growth has moderated after two straight years of record growth," said Sarah Anderson, director of the Global Economy Program at the Progressive Policy Institute. "We shouldn't lose sight of the fact that CEO salaries are still well above historical norms." She said even a small increase over the past year was "outrageous."
Compared with recent years, the increase in CEO wages is slower than the 5.1 percent increase in wages and benefits for private sector workers in 2022.
Still, it pays off for workersCan't keep up with inflation, which was 6.4% at the end of last year. The pay gap between chief executives and blue-collar workers, which has widened for years, narrowed only slightly.
The average wage for workers at companies participating in the AP survey was $77,178, up 1.3% from $76,160 a year ago. That means it would take the employee 186 years to earn what the CEO made last year's average. For the same set of companies, it will take 190 years to 2021.
The timing of some of the biggest compensation packages has been inconsistent against the backdrop of difficult times for the industry.
Alphabet CEO Sundar Pichai topped this year's Associated Press salary survey with nearly $226 million in compensation. The vast majority of his compensation comes from the $218 million in restricted stock awards Google grants its CEO every three years.
The Google CEO won't benefit immediately from the stock award, and how much he can ultimately benefit will depend on how Alphabet stock performs. In contrast to Pichai's 2019 stock awards, Alphabet said in its annual proxy statement that most of the shares in the latest series will only be vested if the company meets shareholder return targets.
Even so, Pichai's total compensation before Google was equivalent to 15 times the average CEO salary this yearTens of thousands of people laid offlabor force. companytotal shareholder returnIt's down 39% over the past year.
Stephen McMurtry, a software engineer at Google and a member of the Alphabet workers union (CWA), said he wasn't concerned when Pichai told employees shortly after the layoffs that executive bonuses would be slashed in 2023, Because "bonuses are first and foremost reserved for a small group of executives". Stock-based compensation. "Pichai gets no bonus in 2022.
"The stark discrepancy between executive rewards and our unemployed former employees undermines trust and further underscores the need for transparency," McMurtry said in an emailed statement to The Associated Press.
Like many other companies, the stock component of Alphabet's executive compensation is designed to reflect years of performance. Since Pichai became CEO in 2015, Alphabet's stock price has nearly quadrupled, making it the third most valuable company on Wall Street.
Alphabet declined to comment beyond its own statement.
Nearly 130 CEOs surveyed by The Associated Press last year took pay cuts. That included UPS Chief Executive Carol Tome, who received a total compensation package worth nearly $19 million, much of it in the form of stock awards. That's down 31% from $27.6 million in 2021. According to UPS, Tome was paid less because the company did not exceed performance goals in 2022 as it did in 2021.
Tommy is trying to distract youPotentially severe strike by unionized workers, who argue they are getting little of the company's profits, which have nearly tripled during the pandemic as consumers became more reliant on supplies.
"I don't regret that she got the kickback," said Jimmy Hadley, a UPS package courier and Teamsters branch manager in Roswell, Georgia. "Nineteen million? Most workers can't do it in their lifetime."
Tomé was paid 364 times the average UPS employee salary of $52,144, even though the company says the median full-time driver salary is $95,000. According to UPS, its executive compensation is "middling compared to other companies of similar size and global size."
Some directors withheld director remuneration due to opposition from institutional investors, who had the opportunity to vote on the Say On Pay total at the AGM. However, such votes are advisory only and will not compel board changes.
Homebuilder Lennar, for example, limited the annual cash bonuses of its co-CEOs Rick Beckwitt and Jonathan Jaffe to $6 million each in response to investor complaints about its $16.6 million bonus for 2021. Just 63% of Lennar investors voted to approve the compensation package at last year's annual shareholder meeting, compared with 84% in 2021.
Total compensation for Beckwitt and Jaffe fell 11% and 12%, respectively, to $30.4 million and $30 million in 2022.
Looking further up, Apple CEO Tim Cook (Tim Cook) ranked first. The $99.4 million compensation package, which ranked No. 3 in the Associated Press poll, is nearly the same as what Apple will pay him in 2021. However, Cook called for a 40% pay cut in 2023 in response to a vote at last year's annual shareholder meeting, when only 64% of shareholders approved Cook's compensation package, compared with 94% last year.
Yet such shareholder resistance remains rare. The vast majority of companies in the Associated Press survey had more than 90 percent support for executive compensation plans through 2022.
thisAP and Equivalent Fee StudyContains salary data for 343 CEOs of S&P 500 companies who have been with the company for at least two fiscal years and made statements between January 1 and April 30. Some highly paid CEOs were excluded because they didn't meet the criteria, such as Amazon's Andy Jassy and Microsoft's Satya Nadella.
The biggest cut to CEO pay last year was the performance-based annual cash bonus, which fell 15.5 percent to an average of $2.3 million. Stock awards, on the other hand, increased by 10.5 percent to an average of $8.5 million.
Cash salaries and bonuses make up less than a quarter of typical CEO compensation in the survey. Much of it comes from stock and stock options, as shareholders demand that CEO compensation be closely aligned with their own returns.
Executives are likely to see deeper pay cuts in 2023 as boards consider the full impact of the stock market drop, said Kelly Malafis, a partner at Compensation Advisory Partners, a consultancy that works with boards.
"We don't see companies burning everything down," Malafis said. "Maybe next year we'll see some of them."
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Associated Press business reporters Alex Veiga in Los Angeles, Matt Ott in Silver Spring, Maryland, and Michael Liedtke in Washington, DC. contributed to this story.
Copyright 2023 The Associated Press. all rights reserved.
FAQs
How much more does a CEO make than a typical worker? ›
In 2021, it was estimated that the CEO-to-worker compensation ratio was 398.8 in the United States. This indicates that, on average, CEOs received about 398.8 times the annual average salary of production and nonsupervisory workers in the key industry of their firm.
Why are CEOs paid so much more than workers? ›CEOs get paid so much because their job requires top-tier skills, talent, knowledge, and experience. A Chief Executive Officer (CEO) of a company is in charge of the entire organization and is accountable for its performance, meaning CEOs are normally the highest-paid individuals in a company.
Has CEO compensation grown 940% since 1978? ›The EPI study found that from 1978 to 2019, CEO compensation expanded by 940 percent while median worker compensation grew by only 12 percent.
What is the difference between executive pay and non executive pay? ›The executive pay is far higher than non-executive pay and usually includes items like salary, bonuses, long term incentive plans, paid expenses, insurance, and employee benefits. Usually, non-executive pay includes salaries, performance related incentives, and benefits.
How much does a CEO of a small company make? ›An average CEO of a small to medium-sized company may expect to get a six-figure compensation in the low 200s. In fact, the average CEO salary for mid-sized businesses in 2020 was $210,000 per year. That is a significant growth compared to 2018 when a typical small business executive usually earned $131,729.
What is a reasonable ratio for CEO pay versus the average employee? ›Using the CEO granted compensation measure, the CEO-to-worker compensation ratio rose to 236-to-1 in 2021, significantly lower than its peak of 393-to-1 in 2000 but still many times higher than the 44-to-1 ratio of 1989 or the 15-to-1 ratio of 1965. Changes in the composition of CEO compensation.
Is it ethical for CEOs to be paid so much? ›Excessive CEO pay exacerbates inequality.
This excessive CEO pay matters for inequality, not only because it means a large amount of money is going to a very small group of individuals, but also because it affects pay structures throughout the corporation and the economy as a whole.
Taxes are one of the main reasons.
CEOs take a lower salary to avoid paying high income tax. Instead, they take stock/equity of the company as compensation, as tax on Capital Gain is much less.
Executives take on increased responsibility and, with it, longer working hours and the pressure of managing the future of their companies and teams, as well as their own workloads. This demanding work schedule leaves executives at a high risk of stress.”
Who is the most overpaid CEO? ›The most overpaid, in their analysis, was Warner Brothers Discovery (WBD) chief David M. Zaslav, who was paid nearly a quarter billion dollars in 2022 only to deliver a five-year annualized total shareholder return of -11.6%.
Does CEO pay cause inflation? ›
Corporate profits and runaway CEO pay are responsible for causing inflation, not workers' wages."
Which CEO is paying employees $5,000 to quit? ›Chris Ronzio, the CEO of Trainual, a software company in Arizona that helps small businesses onboard, train, and scale teams, told Insider that he paid employees to quit. He said the strategy helped him keep top talent across the industry, as well as maintain a strong company culture.
What is the base pay for executives? ›The salaries of Corporate Executives in the US range from $68,600 to $316,042 , with a median salary of $255,461 .
Do non executive members get paid? ›The fees will be paid monthly like a salary, but you are not legally an employee, and pay is usually described as 'directors fees'. NEDs do not typically receive any other employee benefits, pension payments, or bonuses.
What is executive compensation actually paid? ›The new measure of compensation, dubbed “compensation actually paid” under Securities and Exchange Commission rules, is designed to move executive-pay disclosure beyond the moment-in-time snapshots that investors have considered for years.
How much does a CEO of a $10 million dollar company earn? ›Median chief executive officer total direct compensation (the sum of salary, short-term incentives and long-term incentives) is $425,000 for the entire survey population of family businesses. For companies with revenue below $10 million, median CEO total direct compensation is $200,000.
What is the highest paying job in the world? ›- Chief Executive Officer (CEO) ...
- Medical Professionals. ...
- Corporate Lawyer. ...
- Investment Banker. ...
- Data Scientist. ...
- Project Manager. ...
- Senior Software Engineer. ...
- Web Developers.
| Annual Salary | Monthly Pay | |
|---|---|---|
| Top Earners | $208,000 | $17,333 |
| 75th Percentile | $125,000 | $10,416 |
| Average | $100,647 | $8,387 |
| 25th Percentile | $40,500 | $3,375 |
How much should you spend on payroll? The general consensus is that payroll should be no more than 20-30% of the company's gross revenue. However, experts say that in certain industries (such as service businesses) payroll costs can be as high as 50%, without harming profitability.
What percent of the company does a CEO usually own? ›In terms of actual percentage ownership in the company, 5% to 10% is a ballpark area to consider offering your potential CEO.
What percentage of CEO pay is typically cash compensation? ›
CEOs make most of their money through incentives
As a general rule, base salary accounts for just 20 percent of a CEO's pay. The other 80 percent comes from performance-based pay.
The typical signing bonus for salaried and executive roles is between 10-20% of the employee's base pay but can be much higher depending on the industry and company.
What is an example of unethical behavior in a CEO? ›CEO unethical behavior includes things like scandal, fraud, insider trading, incorrect CVs, and sexual harassment.
What is the average bonus percentage for directors? ›How much does a Director make? The average Director in the US makes $183,000. The average bonus for a Director is $38,000 which represents 21% of their salary, with 100% of people reporting that they receive a bonus each year.
What is Mark Zuckerberg salary? ›Zuckerberg's total compensation increased from $26.82 million in 2021 to $27.11 million in 2022 as a result of a rise in "all other compensation."
How much is $1 dollar an hour annually? ›$1 hourly is how much per year? If you make $1 per hour, your Yearly salary would be $2,080. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.
Why does Mark Zuckerberg take $1 dollar a year? ›Well, the primary and rather obvious reason is, taxes. Many co-founders and CEOs take a lower, or a rather minimal salary, like $1, to avoid paying high-income tax which would otherwise be levied if they take millions of dollars as salary.
Is being a director stressful? ›Being a director for film, TV or theatre can be a highly stressful job. You might be responsible for making many major decisions, looking after your cast and crew, and trying to balance the demands of production within short time frames.
Do CEOs work harder than employees? ›The CEO Title Comes With Really Long Hours
As the leader of an organization, it's not surprising that you'll work more than most of your employees. According to the report, CEOs worked an average of 9.7 hours per weekday and also put in an additional four hours per weekend day, on average.
The decision to remove the CEO is the hardest part of the whole process. Once that has been made, the actual firing process is relatively simple and straightforward. The company's main concern afterward should be taking precautionary measures against a potential lawsuit.
Who is the most liked CEO in the world? ›
The CEOWORLD magazine has revealed its annual list of the world's most influential chief executive officers (CEOs) and business executives. Unsurprisingly, James P. Gorman, Chairman and CEO of Morgan Stanley, came first in the CEOWORLD magazine's global ranking of the world's best CEOs across all industries for 2023.
Which CEO has $1 salary? ›Larry Ellison (Oracle Corporation)
What is the average CEO in the US was paid? ›The average CEO salary in the United States is $818,800 as of May 01, 2023, but the range typically falls between $618,900 and $1,055,000. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have spent in your profession.
How do you calculate CEO to worker pay ratio? ›The CEO pay ratio is calculated by dividing the CEO's compensation by the pay of the median employee, meaning half of a company's workers make more and half make less. These are the companies that have filed, including those with the median , lowest and highest CEO pay ratios.
What is the highest CEO to worker ratio? ›This increase was not matched by increased pay for typical workers: The ratio of CEO-to-typical-worker pay soared to 399-to-1 under EPI's realized measure of CEO pay, the highest ratio on record, up from 366-to-1 in 2020 and a massive increase from 59-to-1 in 1989.
Can a CEO take $1 salary? ›For legal reasons, executives have to take some amount as fixed compensation, so as to distinguish them from a volunteer. Thus, they end up taking a small amount $1.
Is it ethical for CEOs to be paid so much more than other employees? ›Excessive CEO pay exacerbates inequality.
This excessive CEO pay matters for inequality, not only because it means a large amount of money is going to a very small group of individuals, but also because it affects pay structures throughout the corporation and the economy as a whole.