The typical compensation package for chief executives who run companies in the S&P 500 jumped nearly 13% last year, easily surpassing the gains for workers at a time when inflation was putting considerable pressure on Americans’ budgets.

The median pay package for CEOs rose to $16.3 million, up 12.6%, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits netted by private-sector workers rose 4.1% through 2023. At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale almost 200 years to make what their CEO did.

CEOs got rewarded as the economy showed remarkable resilience, underpinning strong profits and boosting stock prices. After navigating the pandemic, companies faced challenges from persistent inflation and higher interest rates. About two dozen CEOs in the AP’s annual survey received a pay bump of 50% or more.

“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,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York. “That all combined kind of leads to increased compensation.”

But Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, believes the gap in earnings between top executives and workers plays into the overall dissatisfaction among Americans about the economy.

“Most of the focus here is on inflation, which people are really feeling, but they’re feeling the pain of inflation more because they’re not seeing their wages go up enough,” she said.

Many companies have heeded calls from shareholders to tie CEO compensation more closely to performance. As a result, a large proportion of pay packages consist of stock awards, which the CEO often can’t cash in for years, if at all, unless the company meets certain targets, typically a higher stock price or market value or improved operating profits. The median stock award rose almost 11% last year compared to a 2.7% increase in bonuses.

The AP’s 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.

At the top

Hock Tan, the CEO of Broadcom, topped the AP survey with a pay package valued at about $162 million.

Broadcom granted Tan stock awards valued at $160.5 million on Oct. 31, 2022, for the company’s 2023 fiscal year. Tan was given the opportunity to earn up to 1 million shares starting in fiscal 2025, according to a securities filing, provided that Broadcom’s stock meets certain targets — and he remains CEO for five years.

At the time of the award, Broadcom’s stock was trading at $470. 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 is at or above $1,125 for 20 consecutive days between October 2025 and October 2027.

Broadcom noted that under Tan its market value has increased from $3.8 billion in 2009 to $645 billion (as of May 23) and that its total shareholder return during that time easily surpassed that of the S&P 500.

Other CEOs at the top of AP’s survey are 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).

At Apple, Cook’s compensation represented a 36% decline from the year prior.

Although securities filings show Elon Musk received no compensation as CEO of Tesla Inc., his pay is front and center at the electric car company. Musk is asking shareholders to restore a pay package that was struck down by a judge in Delaware, who said the approval process for the package was “deeply flawed.”

Companies are required to assign a value to stock awards at the time they’re granted. The award given to Musk in 2018 was valued at $2.3 billion. Even if Musk were to cash out portions of those awards — he hasn’t yet — that wouldn’t count as compensation. Musk’s pay package is now estimated to be worth around $45 billion.

Pandemic effect

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, according to the Labor Department.

Even with those gains, the gap between the person in the corner office and everyone else keeps getting wider. 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.

Despite the criticism, shareholders tend to give overwhelming support to pay packages for company leaders. From 2019 to 2023, companies typically received just under 90% of the vote for their executive compensation plans, according to data from Equilar.

Shareholders do occasionally reject a compensation plan, although the votes are non-binding. In 2023, shareholders at 13 companies in the S&P 500 gave the pay package less than 50% support.

Anderson, at the Institute for Policy Studies, said Say on Pay votes are important because they “shine a spotlight on some of the most egregious cases of executive access, and it can lead to negotiations over pay and other issues that shareholders might want to raise with corporate leadership.”