CEO Compensation Soars by Nearly 10% to $17.1 Million in 2024 Amidst Market Boom
NEW YORK (AP) — The typical compensation package for chief executives leading S&P 500 companies surged by nearly 10% in 2024, reaching a median of $17.1 million. This significant increase comes as the stock market enjoyed another banner year and corporate profits rose sharply, according to a comprehensive analysis by The Associated Press and Equilar.
While top executives saw their earnings climb, the median employee at these same companies experienced a far more modest 1.7% increase, bringing their annual earnings to $85,419. This growing disparity highlights ongoing debates about executive compensation and corporate responsibility.
The Dynamics Behind the Pay Jump
The Associated Press’ annual CEO compensation survey, leveraging data meticulously analyzed by Equilar, included pay figures for 344 executives from S&P 500 companies. To qualify, CEOs must have served at least two full consecutive fiscal years at their respective companies and filed proxy statements between January 1 and April 30.
A key driver of this executive pay surge is the increasing emphasis shareholders place on tying CEO compensation directly to performance. Consequently, a substantial portion of these pay packages is comprised of stock awards. These awards often include stringent conditions, requiring the company to meet specific targets—such as a higher stock price, increased market value, or improved operating profits—before the CEO can fully cash them in. The median value of these stock awards alone jumped nearly 15% last year, vastly outpacing the 4% rise in base salaries.
In 2024, CEOs navigated a complex economic landscape marked by persistent inflation, relatively high interest rates, and fluctuating consumer confidence. However, they also benefited from powerful economic tailwinds: resilient consumer spending, a gradual easing of inflation, the Federal Reserve’s decision to lower interest rates, and a consistently strong job market. This favorable environment propelled the S&P 500 benchmark to climb over 23% last year, with corporate profits for companies within the index soaring by more than 9%.
Dan Laddin, a partner at Compensation Advisory Partners, noted that the nearly 10% increase was “commensurate with the timing of the pay decisions,” reflecting the strong performance anticipated and achieved in 2024.
The Highest Earners Among Corporate Leaders
Rick Smith, the visionary founder and CEO of Axon Enterprises, maker of Taser stun guns and body cameras, led the survey with a staggering pay package valued at $164.5 million. Axon’s exceptional performance underpinned this figure, with the company reporting revenue growth exceeding 30% for three consecutive years and achieving a record annual net income of $377 million in 2024. Axon’s shares more than doubled last year, building on a 50% rise in 2023. Nearly all of Smith’s compensation is in the form of stock awards, contingent on the company meeting ambitious stock price and operational targets between 2024 and 2030.
Other notable top earners include:
- Lawrence Culp of GE Aerospace: $87.4 million
- Tim Cook of Apple: $74.6 million
- David Gitlin of Carrier Global: $65.6 million
- Ted Sarandos of Netflix: $61.9 million
As with Smith, the majority of these executives’ compensation was structured through stock or options awards, underscoring the performance-linked nature of modern CEO pay.
The Widening Chasm: CEO-to-Worker Pay Ratio
The stark contrast between executive and employee compensation is further illuminated by the CEO-to-median-worker pay ratio, a metric companies have been required to disclose since 2018. The survey revealed that at half of the companies included, a median employee would need an astonishing 192 years to earn what their CEO makes in a single year.
This gap is particularly pronounced in industries characterized by lower wages. For example, the CEO of cruise line giant Carnival Corp. earned nearly 1,300 times the median pay of its workers, who made approximately $16,900. Similarly, McDonald’s CEO earned roughly 1,000 times the median worker’s pay. These figures are often influenced by companies having extensive international operations where wages may differ significantly.
Overall, private-sector workers in the U.S. saw their wages and benefits increase by 3.6% through 2024, according to the Labor Department. The average American worker earns approximately $65,460 annually, a figure that rises to $92,000 when benefits like health care and other insurance are factored in.
Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, voiced concerns about these trends. She noted that while there have been some “long-overdue” increases in worker pay, particularly at the lower end of the wage scale, “too many workers in the world’s richest countries still struggle to pay their bills.” Anderson added, “These huge disparities are not only unfair to lower-level workers who are making significant contributions to company value – they also undercut enterprise effectiveness by lowering employee morale and boosting turnover rates.”
A Glimmer of Progress for Female CEOs
Amidst these broader trends, the survey highlighted a positive development for female chief executives. A record 27 women were included in the AP survey this year, the highest number since tracking began in 2014. Their median pay package increased by 10.7% to $20 million, outpacing the 9.7% rise to $16.8 million seen by their male counterparts.
Judith Marks, CEO of Otis Worldwide, the renowned elevator and escalator company, was the highest-earning female CEO with a pay package valued at $42.1 million. Approximately $35 million of her compensation was in the form of stock awards, reflecting Otis’ consistent performance with operating profits exceeding $2 billion for four consecutive years.
Other top female earners included:
- Jane Fraser of Citigroup: $31.1 million
- Lisa Su of Advanced Micro Devices: $31 million
- Mary Barra of General Motors: $29.5 million
- Laura Alber of Williams-Sonoma: $27.7 million
Despite these individual successes, Christy Glass, a professor of sociology at Utah State University specializing in equity and leadership, cautioned that overall equity trends appear to be stagnating, especially as many companies scale back on Diversity, Equity, and Inclusion (DEI) programs. “There are maybe a couple more names on the list, but we’re really not moving the needle significantly,” Glass stated.
The Rising Cost of Executive Security
In a notable trend reflecting increased concerns for executive well-being, Equilar’s analysis found a growing number of companies providing enhanced security perquisites as part of their executive compensation packages. This shift is possibly a direct reaction to incidents like the December shooting of UnitedHealthCare CEO Brian Thompson.
An examination of 208 S&P 500 companies that filed proxy statements by April 2 revealed that median spending on executive security rose to $94,276 last year, up significantly from $69,180 in 2023. Companies like Centene, a prominent healthcare services provider, and chipmaker Intel were among those that substantially increased their security provisions for top executives. This trend underscores a shifting corporate landscape where physical security is increasingly viewed as a critical, and costly, component of executive well-being and risk management.
