NEW YORK (AP) - In 2024, the typical compensation package for chief executives in S&P 500 companies increased by nearly 10%, reflecting a robust stock market and significant corporate profit growth. The Associated Press conducted a survey that analyzed pay data for 344 executives who had served at least two full consecutive fiscal years at their companies, with proxy statements filed between January 1 and April 30.
The median pay package for CEOs rose to $17.1 million, up 9.7%, whereas the median employee at these companies earned $85,419, which is a 1.7% increase from the previous year. Despite challenges such as sticky inflation and high-interest rates, the economy was buoyed by consumer spending, reduced inflation, and a strong job market. The S&P 500 stock index experienced a remarkable rise of over 23% last year, alongside a more than 9% increase in profits for the companies within the index.
Dan Laddin, a partner at Compensation Advisory Partners, noted that the approximately 10% increase in pay is aligned with the expectations of a strong economic year. Although there have been some improvements in worker pay, particularly for lower-wage earners, concerns remain about many workers struggling to meet financial obligations.
Among the top earners in the CEO compensation survey was Rick Smith, the CEO of Axon Enterprises, with a pay package valued at $164.5 million. His company, known for producing Taser stun guns and body cameras, saw remarkable revenue growth exceeding 30% for three consecutive years and reported a record net income of $377 million in 2024. The majority of Smith's compensation is tied to stock awards contingent upon the company's performance, which can only be realized if specific targets are met. Other notable top earners included Lawrence Culp from GE Aerospace ($87.4 million), Tim Cook of Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million), and Ted Sarandos from Netflix ($61.9 million).
The median stock award for CEOs rose by nearly 15% compared to a 4% increase in base salaries. Melissa Burek from Compensation Advisory Partners remarked that long-term incentives for executives consistently see higher increases than base pay, indicating the significant role they play in executive compensation. Jackie Cook of Morningstar Sustainalytics emphasized the importance of performance-based pay but also noted that its wider usage has contributed to escalating CEO compensation and deepening the pay disparity within workplaces.
Warren Buffett's name appeared at the lower end of the spectrum, with his compensation valued at approximately $405,000, which is about five times what a worker at Berkshire Hathaway earns. Meanwhile, Tesla’s Elon Musk reported no compensation for 2024, although he was previously awarded a multiyear package worth around $56 billion, still under litigation. Other high-profile CEOs such as Brian Niccol from Starbucks and Jensen Huang from Nvidia had compensation packages that didn't meet the survey criteria.
One of the most alarming statistics from the survey is that at half of the participating companies, a median worker would need to work for 192 years to equal the annual compensation of their CEO. Companies are required to disclose this pay ratio, with the highest ratios typically found in industries with lower wages. For instance, at Carnival Corp., the CEO's pay is almost 1,300 times greater than the median worker’s pay, while McDonald's CEO makes about 1,000 times more than the median worker.
Equilar found that, amid rising compensation for executives, pay for the average U.S. worker increased by 3.6% through 2024, with the average annual earnings at $65,460. Including benefits, this figure climbs to about $92,000. Sarah Anderson, from the Institute for Policy Studies, expressed concern over the excessive pay gap, citing unfairness and its potential to harm employee morale and increase turnover rates.
On a positive note, the survey also reported gains for female CEOs, with the number of women on the list rising to 27, the highest since 2014, and their median pay increasing by 10.7% to $20 million. Judith Marks from Otis Worldwide was the highest-paid female CEO at $42.1 million. Other notable women included Jane Fraser of Citigroup ($31.1 million) and Lisa Su from Advanced Micro Devices ($31 million). However, Christy Glass, a sociology professor, remarked that while there are more women represented, overall equity trends are stagnant, especially as companies reduce Diversity, Equity, and Inclusion (DEI) initiatives.
Finally, an increased number of S&P 500 companies are offering security perks in executive compensation packages, influenced by rising concerns around safety issues, including an incident involving UnitedHealthCare CEO Brian Thompson. An analysis of 208 companies revealed that median spending on security rose significantly from $69,180 in 2023 to $94,276 in 2024.
