Dive Brief:
- Average CEO pay, including stock awards and options, at the top 350 U.S. companies was $22.98 million in 2024, an analysis by the left-leaning Economic Policy Institute showed — a nearly 6% increase from 2023. The rise came after “two uncharacteristic years of decline,” EPI said.
- Even amongst top-paid workers, CEOs outearned their peers, making 7.5 times as much money, EPI found. “This suggests that CEOs are not paid extraordinary amounts because of any special skills or greater productivity, but because they have extraordinary leverage over corporate boards that set their pay,” EPI said.
- EPI’s analysis comes at a time of anxiety and financial stress for the vast majority of workers, as employees feel stalled in their careers, fearful of AI replacement and hopeless about the future.
Dive Insight:
In its release, EPI noted the exploding disparity between CEO and average worker pay; in 1965, chief executives made 21 times as much as the average worker, but in 2024, they made 281 times as much. “From 1978–2024, top CEO compensation skyrocketed 1,094%, compared with a 26% increase in a typical worker’s compensation,” EPI said.
The explosion is due in large part to CEO pay being increasingly tied to stock options. “Realized stock awards and stock options made up 67.8% of total CEO compensation in 2006 … and 79.1% of total compensation in 2024,” EPI said. “The growth of these stock-related components from 2006 to 2024 explains over 100% of the total growth in CEO realized compensation over this period.”
Shareholder advocacy group As You Sow is among those putting pressure on companies to address CEO overpayment, regularly releasing a list of the “Most Overpaid CEOs.” In their last report, released in November 2023, the group named the CEOs of Live Nation Entertainment, Oracle and Alphabet in its top three spots.
EPI also pointed to legislation recently reintroduced by Sen. Bernie Sanders, I-Vt., and Rep. Rashida Tlaib, D-Mich., that would raise taxes on corporations that pay their executives more than 50 times the wages of their workers. The Tax Excessive CEO Pay Act was previously introduced in 2024, but it stalled after being referred to the Senate’s Committee on Finance.
Those in support of very high CEO pay, such as one University of Chicago Booth School of Business researcher, have argued it is largely a result of the market for talent and supply and demand dynamics.
Around three-quarters of U.S. respondents to a 2021 Just Capital survey said they believed CEOs were overcompensated, however — including vast majorities of both Democrats and Republicans. Roughly three-quarters also said the gap between the rich and the poor was a “major problem” in the U.S. today.
“CEOs do not work 281 times harder than the typical worker — they just have the power to set their own pay, and the dysfunctional labor market for corporate executives doesn’t provide any effective discipline against this,” Josh Bivens of EPI said.
