Broadcom CEO Hock Tan tops the list of AP’s highest earners with a pay deal that came in at around $162 million (€149 million).
Chief executives of major US companies saw their pay leap nearly 13% last year, soaring way ahead of their workers, according to data analysed on behalf of AP news agency. That was considerably higher than amounts earned by workers who are feeling the strain on their budgets because of inflation.
The average pay packet for CEOs rose to $16.3 million (€15 million), up 12.6%, according to the Equilar data. Meanwhile, wages and benefits awarded to private-sector workers rose a much more modest 4.1% over the same period. That means an employer would need to work around 200 years to earn the same as their CEO.
CEOs were reportedly rewarded because of a resilient economy which underpinned strong profits and boosted share prices. Companies have been facing post-pandemic challenges from persistent inflation and higher interest rates.
About two dozen CEOs in the AP’s annual survey received a pay rise 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.
Some 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. These might include achieving a higher stock price or market value or improved operating profits.
The AP 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. The S&P 500 is an index that tracks the share performance of 500 of the largest companies listed on US stock exchanges.
Top Earners
Hock Tan, CEO of semi-conductor manufacturing company Broadcom, topped the AP survey with a pay package valued at about $162 million.
Similar to rival Nvidia, Broadcom is riding the current artificial intelligence frenzy among tech companies. Its chips are used by businesses and public entities ranging from major banks, retailers, telecom operators and government bodies.
In granting the stock award, 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. It also said Tan would not receive additional stock awards during the remainder of the five-year period.
Other CEOs at the top of AP’s survey are William Lansing of Fair Isaac Corp, ($66.3 million); Apple’s Tim Cook ($63.2 million); Prologis’s Hamid Moghadam ($50.9 million); and Ted Sarandos, co-CEO of Netflix ($49.8 million).
Although securities filings show Elon Musk received no compensation as CEO of Tesla, his pay is very much a matter of debate with Musk 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”.
CEO pay vs workers
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 official figures.
However, even with those gains, the gap between the person on the shop floor and company executives is getting wider. Half the CEOs in this year’s pay survey made at least 196 times what the average employee in their company earned. That’s up from 185 times in last year’s survey.
