The typical compensation package for chief executives who run companies in the S&P 500 jumped nearly 10% in 2024 as the stock market enjoyed another banner year and corporate profits rose sharply.
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, market value or improved operating profits.
The Associated Press CEO compensation survey, using data analyzed for the AP by Equilar, included pay data for 344 executives at S&P 500 companies who served at least two full consecutive fiscal years and filed proxy statements between Jan. 1 and April 30.
A good year at the top
The median pay package for CEOs rose to US$17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned US$85,419, reflecting a 1.7% increase year over year.
CEOs had to navigate sticky inflation and relatively high interest rates last year, as well as declining consumer confidence. But the economy also provided some tailwinds: consumers kept spending despite concerns; inflation subsided somewhat; the Fed lowered interest rates; and the job market stayed strong.
The S&P 500 rose more than 23% last year. Profits for companies in the index rose more than 9%.
“2024 was expected to be a strong year, so the (nearly) 10% increases are commensurate with the timing of the pay decisions,” said Dan Laddin, a partner at Compensation Advisory Partners.
Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, said there have been some recent “long-overdue” increases in worker pay, especially for those at the bottom of the wage scale. But she said too many workers in the world’s richest countries still struggle to pay their bills.
The top earners
Rick Smith, founder and CEO of Axon Enterprises, topped the survey with a pay package valued at US$164.5 million. Axon, which makes Taser stun guns and body cameras, saw revenue grow more than 30% for three straight years and posted record annual net income of US$377 million in 2024. Axon’s shares more than doubled last year after rising more than 50% in 2023.
Almost all of Smith’s pay package consists of stock awards, which he can only receive if the company meets targets tied to its stock price and operations for the period from 2024 to 2030. Companies are required to assign a value to the stock awards when granted.
Other top earners in the survey include Lawrence Culp, CEO of GE Aerospace (US$87.4 million); Tim Cook at Apple (US$74.6 million); David Gitlin at Carrier Global (US$65.6 million); and Ted Sarandos at Netflix (US$61.9 million). The bulk of those pay packages consisted of stock or options awards.
The median stock award rose almost 15% last year, compared to a 4% increase in base salaries, according to Equilar.
“For CEOs, target long-term incentives consistently increase more each year than salaries or bonuses,” said Melissa Burek, also a partner at Compensation Advisory Partners. “Given the significant role that long-term incentives play in executive pay, this trend makes sense.”
Jackie Cook at Morningstar Sustainalytics said the benefit of tying CEO pay to performance is “that share-based pay appears to provide a clear market signal that most shareholders care about.” But she noted the greater use of share-based pay has led to a “phenomenal rise” in CEO compensation “tracking recent years’ market performance,” which has “widened the pay gap within workplaces.”
Some well-known billionaire CEOs are low in the AP survey. Warren Buffett’s compensation was valued at US$405,000 — about five times what a worker at Berkshire Hathaway makes. According to Tesla’s proxy, Elon Musk received no compensation for 2024, though in 2018 he was awarded a multiyear package valued at US$56 billion that is now the subject of a court battle.
Other notable CEOs didn’t meet the criteria for inclusion. Starbucks’ Laxman Narasimhan received a pay package valued at US$95.8 million, but only took over as CEO on Sept. 9. Nvidia’s Jensen Huang saw his compensation grow to US$49.9 million, but the company filed its proxy after April 30.
The pay gap
At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale 192 years to make what the CEO did in one. Companies have been required to disclose this so-called pay ratio since 2018.
The pay ratio tends to be highest in industries where wages are typically low. At cruise line company Carnival Corp., the CEO earned nearly 1,300 times the median pay of US$16,900 for its workers. McDonald’s CEO makes about 1,000 times what a worker making the company’s median pay does. Both companies operate in multiple countries.
Overall, wages and benefits netted by private-sector workers in the U.S. rose 3.6% through 2024, according to the Labor Department. The average worker in the U.S. makes US$65,460 a year. That rises to US$92,000 when benefits such as health care and insurance are included.
“With CEO pay continuing to climb, we still have an enormous problem with excessive pay gaps,” Anderson said. “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.”
Some gains for female CEOs
For the 27 women who made the AP survey — the highest number dating back to 2014 — median pay rose 10.7% to US$20 million. That compares to a 9.7% increase to US$16.8 million for male counterparts.
The highest earner among female CEOs was Judith Marks of Otis Worldwide, with a pay package valued at US$42.1 million. The company, known for its elevators and escalators, has had operating profit above US$2 billion for four straight years. About US$35 million of Marks’ compensation was in stock awards.
Other top earners among female CEOs were Jane Fraser of Citigroup (US$31.1 million); Lisa Su of Advanced Micro Devices (US$31 million); Mary Barra at General Motors (US$29.5 million); and Laura Alber at Williams-Sonoma (US$27.7 million).
Christy Glass, a professor of sociology at Utah State University who studies equity, inclusion and leadership, said while there may be a few more women on the top-paid CEO list, overall equity trends are stagnating — particularly as companies cut back on DEI programs.
“There are maybe a couple more names on the list, but we’re really not moving the needle significantly,” she said.
Prioritizing security
Equilar found a growing number of companies are offering security perquisites as part of executive compensation packages, possibly in response to the December shooting of UnitedHealthCare CEO Brian Thompson.
An analysis of 208 companies in the S&P 500 that filed proxy statements by April 2 showed median spending on security rose to US$94,276 last year from US$69,180 in 2023.
Among the companies that increased security perks were Centene, which provides health care services to Medicare and Medicaid, and the chipmaker Intel.