CEOs got big raises last year; workers didn't

The typical compensation package for S&P 500 chief executives surged nearly 13% last year, starkly contrasting the modest gains seen by average workers.

Meanwhile, inflation heavily impacts Americans' budgets, putting considerable financial pressure on households nationwide. The widening pay gap between top executives and their employees has become a growing concern as the cost of living rises.

Median CEO pay reaches $16.3 million

According to data analyzed by Equilar for The Associated Press, the median pay package for CEOs rose to $16.3 million, up 12.6%. Meanwhile, private-sector worker wages and benefits increased by 4.1% in 2023. 

At half of the companies in the Associated Press annual pay survey, a median employee would need nearly 200 years to earn what their CEO did.

"In this post-pandemic market, the desire is for boards to reward and retain CEOs when they feel like they have a good leader in place," Kelly Malafis, founding partner of Compensation Advisory Partners in New York told the Associated Press. 

Highest paid CEOs

The CEO compensation survey included pay data for 341 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between Jan. 1 and April 30.

Hock Tan, the CEO of Broadcom, topped the Associated Press survey with a pay package valued at about $162 million. On Oct. 31, 2022, for the company's 2023 fiscal year, Broadcom granted Tan stock awards valued at $160.5 million. 

According to a securities filing, Tan was given the opportunity to earn up to 1 million shares starting in fiscal 2025, provided that Broadcom’s stock meets certain targets and he remains CEO for five years. Broadcom’s stock was trading at $470 at the time of the award. The stock has skyrocketed since and reached an all-time high of $1,436.17 on May 15. 

Tan will receive the full award if the average closing price exceeds $1,125 for 20 consecutive days between October 2025 and October 2027. Broadcom noted that under Tan, its market value increased from $3.8 billion in 2009 to $645 billion (as of May 23), and its total shareholder return during that time easily surpassed that of the S&P 500.

Other top CEOs

Other CEOs at the top of the survey include William Lansing of Fair Isaac Corp, ($66.3 million); Tim Cook of Apple Inc. ($63.2 million); Hamid Moghadam of Prologis Inc. ($50.9 million); and Ted Sarandos co-CEO of Netflix ($49.8 million).

Lisa Su, CEO of chipmaker Advanced Micro Devices, was the highest-paid female CEO in the AP survey for the fifth year in fiscal 2023, bringing in compensation valued at $30.3 million — flat with her compensation package in 2022. Her overall rank rose to 21 from 25.

How workers' wages increased by comparison

According to the Labor Department, workers across the country have been winning higher pay since the pandemic, with wages and benefits for private-sector employees rising 4.1% in 2023 after a 5.1% increase in 2022. 

Even with those gains, the gap between the person in the corner office and everyone else keeps widening. Half the CEOs in this year’s pay survey made at least 196 times what their median employee earned. That’s up from 185 times in last year’s survey.

The disparity between what the chief executive makes and what workers earn wasn't always so wide. After World War II and until the 1980s, CEOs of large publicly traded companies made about 40 to 50 times the average worker’s pay, said Brandon Rees, deputy director of corporations and capital markets for the AFL-CIO, which runs an Executive Paywatch website that tracks CEO pay.

"The (current) pay ratio signals a sort of a winner-take-all culture, that companies are treating their CEOs as, you know, as superstars as opposed to team players," Rees said.

The Associated Press contributed to this story.