The typical CEO makes nearly 200 times more than their workers

The median CEO pay hit $16.3 million in 2023, which is nearly 200 times the typical worker's wages for the year, according to data analyzed by Equilar for The Associated Press. CEO compensation packages for chief executives at S&P 500 companies rose almost 13% last year. Additionally, around two dozen chief executives saw a pay increase of 50% or more.

In contrast, worker wages rose by 5.2% over the last year, just slightly above the rate of inflation. The biggest wage gains went to the lowest-paid workers. The median S&P 500 employee earned $81,467 in 2023.

This widening CEO-to-worker pay gap occurred as company boards worked to retain executives and businesses performed well in the stock market. In 2022, CEOs made roughly 185 times their typical worker, and this ratio has now grown to around 196 times.

The disparity is driven by the fact that many top executives are compensated based on their company's performance, with stock awards making up about 70% of their total pay packages. CEO pay is generally decided by shareholders, who have overwhelmingly voted in support of executive compensation plans in the last four years, per Equilar data.

CEO pay has skyrocketed by 1,209% since 1978, while typical worker wages have only increased by 15% over the same period. Factors contributing to this include high unemployment, globalization, the decline of unions, low labor standards, the rise of non-compete clauses, and domestic outsourcing.

Whether CEOs are overpaid is "really up to shareholders to decide," says Amit Batish of Equilar. He notes that adequately compensating CEOs can be critical for an organization's long-term success, especially during economic downturns. However, if performance goals are unmet, shareholders may express dissatisfaction by reducing compensation.

Batish expects CEO pay to continue outpacing growth in median worker pay, though CEO stock compensation is not guaranteed. Meanwhile, the value of stock awards can appreciate over time, benefiting executives, while employee cash compensation contends with inflation.

This widening pay gap could be a reason for Americans' dissatisfaction with the economy, as people feel the pain of inflation more acutely when their wages are not keeping up. 

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