Wage growth in the c-suites of corporate America is slowing down, but it’s still much faster than that of the typical U.S. worker.
The proxy advising service ISS, which helps institutional investors figure out how to vote on certain shareholder initiatives at the public companies they’re invested in, said Tuesday that the median CEO compensation among S&P 500 companies has jumped 9.2% from 2023 to $15.7 million.
Most of this pay growth comes from the value of stock awards and options. ISS said that the typical cash pay was $1.3 million, up just 2.8% from 2023, but the typical stock payout was more than $12 million, up about 10%.
The Bureau of Labor Statistics, on the other hand, found in April that the average hourly wage for production and non-supervisory employees in the U.S. rose by a much slower 4.2%. But since the stock market is doing well — the S&P 500 is up nearly 22% from the same time a year ago — shareholders have decided to handsomely reward executives for running the ship that has been generating all those returns. What’s more: ISS suggests that a 9% pay bump isn’t even all that outrageous in the grand scheme of things.
“Large company disclosures so far suggest a return to historical norms for U.S. CEO pay growth with the slower rate of growth evidenced last year likely looking to be an aberration,” said Roy Saliba, Managing Director at ISS-Corporate. “The stock market continued to show resilience and exceeded most expectations during the same period as evidenced by the strong performance of many companies even when faced with higher interest rates and tighter monetary policy, potentially allaying pay and performance alignment concerns as CEO pay continues to rise.”