Median pay for top CEOs in the United States rose by 7.5% in 2024, reaching an all-time high of $16.8 million, according to a new study. This increase is largely due to substantial stock grants, which have significantly boosted the reported earnings of these executives compared to the average pay of American workers.
The report, conducted by ISS-Corporate, the advisory arm of Institutional Shareholder Services, highlighted that CEOs from companies like Axon and Union Pacific were among those benefiting from large pay increases tied to stock awards. This analysis focused on 320 companies within the S&P 500 that have disclosed their pay data for the year.
Roy Saliba, managing director at ISS-Corporate, noted that the pay figures reflect decisions made during a relatively stable period in 2023, before recent market turbulence caused by a trade war initiated by former President Donald Trump. He pointed out that the compensation numbers do not align with the current performance of companies or stock prices, suggesting that the decisions regarding pay were made well in advance.
Saliba advised companies to reconsider their compensation strategies in light of the ongoing market uncertainty. He suggested that boards might benefit from using different performance measures to evaluate executives against their peers.
The study also revealed that while CEO compensation has risen sharply, the average hourly earnings for U.S. workers increased by only 4% last year. Meanwhile, inflation was reported at just under 3% in 2024. The median total shareholder return for the companies studied was 15.1%, indicating that company shares performed better than the average worker’s wage growth.
Notably, Axon’s CEO, Patrick Smith, saw a remarkable jump in his pay, officially receiving $164.5 million in 2024, compared to just over $40,000 in 2023. His compensation was heavily influenced by stock units tied to future performance goals. In contrast, Union Pacific’s CEO, James Vena, earned $17.6 million for 2024, a significant increase from the $2 million he received for part of the previous year.
The growing disparity between CEO pay and worker wages has long been a concern for many, including progressive politicians like Senator Bernie Sanders. He has proposed legislation aimed at taxing companies whose executive pay exceeds 50 times that of their average workers. However, this legislation has not yet been enacted.
As the conversation around income inequality continues, the dramatic rise in CEO pay raises questions about the fairness and sustainability of such compensation structures in today’s economic climate.