S&P 500 CEOs See Nearly 10% Pay Hike in 2024 Amidst Robust Stock Market and Profits
NEW YORK (AP) — Chief executives leading the largest U.S. companies, those within the S&P 500 index, experienced a nearly 10% increase in their typical compensation packages in 2024. This significant rise, pushing the median pay to $17.1 million, largely mirrors a robust year for the stock market and a sharp upturn in corporate profits.
The Associated Press’ annual CEO compensation survey, meticulously compiled by Equilar, analyzed the pay data for 344 executives from S&P 500 companies. To ensure a consistent and comparable dataset, the survey focused on CEOs who had completed at least two full consecutive fiscal years at their respective companies and whose proxy statements were filed between January 1 and April 30.
A Lucrative Year at the Helm
While the median pay for an S&P 500 CEO climbed by 9.7% to $17.1 million, the median employee at these same companies saw a more modest 1.7% increase, bringing their annual earnings to $85,419. This widening disparity underscores a key trend in executive compensation.
CEOs navigated a complex economic landscape in the preceding year (2023), characterized by persistent inflation and relatively high interest rates, coupled with fluctuating consumer confidence. However, several economic tailwinds ultimately buoyed corporate performance: consumer spending remained resilient, inflation showed signs of cooling, and the job market remained remarkably strong. These favorable conditions translated into impressive financial gains, with the S&P 500’s main benchmark soaring over 23% and corporate profits for index companies increasing by more than 9% in the past year.
Dan Laddin, a partner at Compensation Advisory Partners, commented on the findings, stating, “2024 was expected to be a strong year, so the (nearly) 10% increases are commensurate with the timing of the pay decisions.”
Performance-Driven Pay Dominates
A significant factor contributing to these escalating pay packages is the growing emphasis on performance-based compensation. Many companies have responded to shareholder demands by tying a larger proportion of CEO pay to the company’s achievements. Consequently, stock awards now constitute a substantial part of executive compensation. These awards often cannot be cashed in for several years, if at all, unless the company achieves predefined targets, such as a higher stock price, increased market value, or improved operating profits.
Indeed, Equilar’s analysis revealed that the median stock award surged almost 15% last year, starkly contrasting with a mere 4% increase in base salaries. Melissa Burek, also a partner at Compensation Advisory Partners, explained this trend: “For CEOs, target long-term incentives consistently increase more each year than salaries or bonuses. Given the significant role that long-term incentives play in executive pay, this trend makes sense.”
However, Jackie Cook of Morningstar Sustainalytics highlights a potential drawback: while share-based pay provides a “clear market signal that most shareholders care about,” its increased use has also led to a “phenomenal rise” in CEO compensation, which, in turn, has “widened the pay gap within workplaces.”
The Top Earners
Leading the pack in this year’s survey is Rick Smith, founder and CEO of Axon Enterprises, with a staggering pay package valued at $164.5 million. Axon, renowned for its Taser stun guns and body cameras, demonstrated exceptional growth, with revenue increasing over 30% for three consecutive years and recording a net income of $377 million in 2024. The company’s shares more than doubled last year, building on a robust 50% rise in 2023. Reflecting the performance-driven model, almost all of Smith’s compensation is in the form of stock awards, contingent on the company meeting specific stock price and operational targets between 2024 and 2030.
Other prominent executives among the highest 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
The majority of these high-value packages also consisted of stock or options awards. Notably, some billionaire CEOs, like Warren Buffett of Berkshire Hathaway, appeared lower in the rankings with compensation valued at $405,000, approximately five times that of a median Berkshire Hathaway worker. Elon Musk, CEO of Tesla, reported no compensation for 2024, though his 2018 multi-year package, valued at $56 billion, remains the subject of an ongoing court battle.
Some highly-compensated executives, such as Starbucks’ Brian Niccol ($95.8 million) and Nvidia’s Jensen Huang ($49.9 million), did not meet the survey’s criteria due to factors like tenure or proxy filing dates.
The Widening Pay Gap
The stark contrast between executive and employee compensation continues to be a point of public and expert scrutiny. At half of the companies included in the AP’s survey, it would take a median worker 192 years to earn what their CEO makes in just one year. This “pay ratio” disclosure has been mandated for companies since 2018.
Industries with typically lower wages often exhibit the highest pay ratios. For instance, at cruise line giant Carnival Corp., its CEO earned nearly 1,300 times the median employee pay of $16,900. Similarly, McDonald’s CEO made approximately 1,000 times more than the company’s median worker. Both companies operate across numerous countries, which can influence their median worker compensation figures.
Nationally, private-sector worker wages and benefits in the U.S. increased by 3.6% through 2024. The average American worker earns $65,460 annually, a figure that rises to $92,000 when benefits such as health care and other insurance are included.
Sarah Anderson of the Institute for Policy Studies, a progressive think tank, voiced concerns over these disparities: “With CEO pay continuing to climb, we still have an enormous problem with excessive pay gaps. 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.”
Gains for Female CEOs
The 2024 survey marked a positive trend for women in top leadership, with 27 female CEOs included – the highest number since 2014. Their median pay rose by 10.7% to $20 million, outpacing the 9.7% increase ($16.8 million) seen by their male counterparts.
Judith Marks, CEO of Otis Worldwide, an industry leader in elevators and escalators, was the highest-earning female executive with a pay package valued at $42.1 million. Approximately $35 million of her compensation was in stock awards, reflecting Otis’ consistent performance, including operating profits exceeding $2 billion for four consecutive years.
Other top-earning female CEOs 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 achievements, Christy Glass, a professor of sociology at Utah State University specializing in equity and leadership, notes that overall equity trends are largely stagnating, particularly as companies scale back 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 observed.
Prioritizing Executive Security
An emerging trend identified by Equilar is an increase in security perquisites within executive compensation packages. This rise may be a direct response to recent high-profile incidents, such as the December shooting of UnitedHealthCare CEO Brian Thompson.
Equilar’s analysis of 208 S&P 500 companies that filed proxy statements by April 2 showed that median spending on executive security climbed to $94,276 in 2024, up from $69,180 in 2023. Companies like Centene, a healthcare services provider, and chipmaker Intel were among those that significantly increased their security provisions for executives.
