The typical compensation for chief executives in S&P 500 companies experienced a significant increase of nearly 10% in 2024, driven by strong performance in the stock market and rising corporate profits. According to a comprehensive survey conducted by the Associated Press and analyzed by Equilar, the median pay for these executives reached $17.1 million, reflecting a robust business environment marked by a 23% rise in the S&P 500 Index and a profit increase of over 9% among the surveyed companies.
The data, which encompasses the compensation packages of 344 CEOs who have served at least two consecutive fiscal years, highlights a trend where companies have aligned executive pay more closely with company performance. A substantial portion of these compensation packages comprises stock awards that executives cannot monetize immediately but are contingent upon meeting specific performance targets, such as achieving certain stock price benchmarks or enhancing operational profit margins. As corporations shift towards performance-based compensation models, there has been increased scrutiny from shareholders concerned about the growing pay disparity between executives and average workers.
In examining the broader economic context, CEOs faced a challenging landscape in 2023, contending with persistently high inflation and interest rates, coupled with declining consumer confidence. However, favorable factors such as sustained consumer spending and a resilient job market contributed to corporate growth. As Dan Laddin from Compensation Advisory Partners noted, the increase in executive pay is consistent with the outlook for a positive economic environment.
This year’s survey also reveals that while the median employee salary across participating companies rose by a modest 1.7% to approximately $85,419, the disparity between CEO pay and worker compensation remains stark. Analysts point out that while there have been some improvements in compensation for lower-income workers, many individuals in advanced economies still struggle to keep pace with rising living costs.
Rick Smith, the CEO of Axon Enterprises, leads the survey with a staggering compensation package valued at $164.5 million. Axon, a tech firm known for its law enforcement products such as Tasers and body cameras, reported remarkable revenue growth of over 30% consistently for three years and achieved a record net income of $377 million in 2024. Smith’s compensation is predominantly tied to stock awards, which will only vest if the company achieves specified financial targets by 2030.
Other prominent figures in the compensation rankings include Lawrence Culp of GE Aerospace, who received $87.4 million, Tim Cook of Apple at $74.6 million, Carrier Global’s David Gitlin at $65.6 million, and Ted Sarandos of Netflix, whose pay reached $61.9 million. The bulk of these amounts consisted of stock or options, highlighting the increasing emphasis on performance-based pay.
According to Equilar, the median stock award has surged nearly 15% compared to a 4% increase in base salaries. Melissa Burek, also a partner at Compensation Advisory Partners, explains that long-term incentive compensation has increasingly outpaced base salaries or bonuses as companies seek to ensure that their leaders are motivated to enhance shareholder value over time.
However, this trend has not been without its critics. Jackie Cook from Morningstar Sustainalytics notes that while tying compensation to performance may align the interests of CEOs with those of shareholders, it has also contributed to a pronounced rise in executive pay that correlates with market gains. This increase has further exacerbated wage disparities within organizations, impacting employee morale and potentially increasing turnover rates.
Interestingly, some billionaire CEOs appear low on the list, with Warren Buffett’s compensation noted at $405,000, a figure significantly lower than that of many of his peers. Meanwhile, Elon Musk’s reported compensation for 2024 was zero, as he remains entangled in a court case concerning a multi-billion dollar package awarded in a previous year.
The pay gap, as highlighted in the AP survey, remains a significant issue. At many surveyed companies, it would take a median worker nearly 192 years to earn what their CEO makes in just one year. This disparity is particularly pronounced in industries that traditionally offer lower wages, such as hospitality. For instance, Carnival Corporation’s CEO compensation was nearly 1,300 times higher than the median pay of its workers, and McDonald’s CEO earned about 1,000 times the median employee salary.
While wages and benefits for private-sector workers have seen a rise of 3.6% through 2024, the average annual salary remains relatively stagnant at around $65,460, and even this figure increases to approximately $92,000 when accounting for additional benefits. Critics like Sarah Anderson from the Institute for Policy Studies emphasize the unfairness of such vast disparities, arguing that they undermine both morale and productivity within organizations.
In a noteworthy development, the survey identified an increase in the number of female CEOs as well. With 27 women making the list—the highest number since 2014—the median pay for female executives rose by 10.7% to $20 million, compared to a 9.7% increase for male counterparts. Judith Marks of Otis Worldwide was the top female earner, with a compensation package valued at $42.1 million. Other notable names include Jane Fraser of Citigroup at $31.1 million and Lisa Su of AMD at $31 million.
Despite these gains, experts like Christy Glass, a sociologist studying equity and leadership, caution that overall progress in gender equity remains minimal. The incremental increase in the representation of women among top earners does not mask the stagnation in broader equity trends, particularly as businesses reduce diversity, equity, and inclusion initiatives.
In light of rising security risks highlighted by recent violent incidents, including a shooting involving UnitedHealthCare’s CEO, there has been a marked increase in security-related benefits in executive compensation packages. An analysis by Equilar revealed that median spending on security for executives rose significantly in 2024, indicating a growing concern for the safety of corporate leaders.
As the scrutiny on CEO compensation intensifies, propelled by both shareholder activism and public discourse around income inequality, companies will likely need to navigate these complexities carefully. Ultimately, the dynamics of executive compensation remain a critical focal point for ongoing discussions regarding corporate governance, ethical standards in leadership, and the future of equitable wage practices.