(CNN) — CEOs earn big pay packages as the US stock market grows.
The bosses always made more money than the workers. But the gap between CEOs and employees continues to grow.
The average S&P 500 CEO earned 196 times more than the average employee in 2023, according to an analysis by Equilar and The Associated Press.
That’s even more than the 185-fold ratio recorded in 2022.
The widening gap is due to the fact that CEO pay, which is closely tied to stock prices, rises noticeably faster than that of employees. In fact, many workers struggle to keep up with the cost of living.
The jump in 2023 was especially significant. Median total compensation for S&P 500 CEOs (including stock awards) soared to $16.3 million in 2023, a whopping 12.6% year-over-year increase, compared to just 0.9% in 2022 .
Workers also earned more money. But at a much slower pace.
The average S&P 500 employee earned $81,467 annually last year, up 5.2% from 2022, according to the report.
To put it another way: The annual pay increase was about $4,300 for workers, but for CEOs, it was an additional $1.5 million.
Those findings are likely to prove frustrating to employees who face high costs on everything from groceries and childcare to auto insurance. The inflation rate in the United States fell, but remains above normal.
Wages grew faster than prices, a reversal from 2021 and 2022. However, workers are still suffering the cumulative impact of three years of high inflation.
Americans spend $1,015 more per month than in 2021 for the same basket of goods and services, according to Moody’s Analytics. That increase in costs almost completely absorbs the increase in revenue, which rose $1,109 a month during that period, Moody’s said.
Take advantage of the market boom
CEO compensation is closely linked to the fate of the stock market. Although most CEOs earn a salary and earn benefits, the majority of their total compensation typically comes from stock awards.
Stock awards accounted for about 70% of total compensation last year, according to the Equilar study.
Given the stock market’s rise, the average stock award increased 10.7% to $9.4 million, according to the report.
Last year, the S&P 500 soared 24% as investors breathed a sigh of relief that the economy did not sink into a recession and they awaited possible interest rate cuts from the Federal Reserve. The Nasdaq rose 43% last year, boosted by the rise of artificial intelligence.
Although persistent inflation has prevented the Federal Reserve from lowering rates so far this year, the S&P 500 has risen another 11% since the beginning of the year to reach all-time highs. That suggests CEO pay packages could be even higher this year.
The $162 million CEO
No S&P 500 CEO came close to the total salary of Broadcom CEO Hock Tan, who grossed $161.8 million last year.
Tan’s huge payday was driven almost entirely by stock awards after Broadcom’s share price nearly doubled last year. Broadcom’s CEO’s compensation doubled in 2023, leaving him with 510 times the average salary of the company’s employees.
The next closest CEO in terms of compensation last year was FICO CEO William Lansing, according to Equilar. Lansing’s total compensation reached $66.3 million last year.
Apple CEO Tim Cook was the third-highest-paid CEO in the S&P 500, earning $63.2 million last year, 672 times the average Apple employee salary of $94,118.
The wage gap is even starker in some companies that rely on hourly and part-time workers.
For example, Barbara Rentler, CEO of clothing retailer Ross Stores, received $18.1 million in total compensation last year. The average Ross employee, a part-time, hourly retail store associate, earned $8,618. That means Rentler earned 2,100 times more than her average employee.
