CEO pay is rising faster than it has in a decade — and 3 times as fast as worker wages

Executive pay in the U.S. is skyrocketing at the highest rate in 14 years, widening the income-inequality gap as it increases almost three times faster than overall wage growth.

So far this year, Median CEO pay for S&P 500 companies shot up 12%, the Financial Times reports, while average workers are seeing about a 4.1% increase in their paychecks.

“The sky’s the limit” for CEOs, said William George, who previously served as the chair of Exxon’s compensation committee board. Executive pay “has gotten out of control,” he told FT, adding that he fears overinflated salaries will lead to increased consumer distrust of corporations. “This is going to cause a further split in our country between the haves and the have nots.”

Rising executive pay is often driven by market demand, Robin Ferracone, the CEO of Farient Advisors, an executive compensation advisory, told FT. She said companies are trying “to keep their CEOs from taking phone calls from [rivals’] search committees.”

The news of increased CEO pay comes as shareholders awarded Tesla boss Elon Musk a staggering $56 billion pay package of stock options on Thursday.

Although there is often a “contagion effect” with executive pay where “one big pay package seems to generate another,” University of Pennsylvania law professor Jill Fisch told FT that Musk’s recent package likely won’t be replicated.

Musk, she said, “is in a class by himself,” and was also in a unique situation at Tesla, where he was trying to reap a package first ratified by shareholders in 2018 that became tied up in a protracted legal battle.

The proxy advising service ISS said in the April that the median CEO compensation at S&P 500 companies was $15.7 million. Meanwhile, the median salary in 2023 for S&P 500 employees was $81,467.