The gap between what chief executives and their workers make each year is growing.
The median salary for S&P 500 employees grew 5.2% to $81,467 in 2023, while total compensation for CEOs rose 12.6% to $16.3 million — bringing CEO pay to 196 times that of workers, a recent study by Equilar and the Associated Press found.
CEO pay often rises with strong economic conditions, both from company performance-based rewards and healthy stock market returns. Last year, stock awards made up approximately 70% of total S&P 500 CEO compensation, the report found. The median value of stock awards climbed 10.7% to $9.4 million, making it a major driver in boosting total CEO compensation. The S&P 500 index rallied 24% in 2023.
Read more: How much top Wall Street CEOs were paid last year
At least once every three years, shareholders of public companies are required to carry out an advisory vote on compensation programs for top executives, including the CEO, the chief financial officer, and at least three other most-highly compensated leaders.
Soaring CEO pay has become a point of contention among investors, who are looking for results before lining executives’ pockets. Proxy adviser Glass Lewis asked Morgan Stanley shareholders to vote against the investment bank’s proposal for executive pay in April, noting that the “company paid significantly more than its peers, but performed worse.” Former Morgan Stanley CEO James Gorman made $37 million in his final year in the investment bank’s top role — the highest among Wall Street’s top firms.
Earlier that same month, Glass Lewis called for an advisory vote against Goldman Sachs’ executive pay, saying shareholders “should be wary of the continued disconnect between pay and performance.”
A similar battle is playing out at electric vehicle-maker Tesla, whose CEO Elon Musk is requesting a $46 billion pay package. A group of shareholders is urging investors to turn down the compensation on voting day. The package was struck down by judge in January.