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The Wall Street Journal published its list of the highest-paid CEOs in 2024, revealing some unexpected findings. Notably, the CEOs of the largest tech firms—whose market capitalizations exceed the GDP of some countries—weren’t at the top.
But the real headline is the enormous gap between CEO compensation and average worker pay. A study by the Economic Policy Institute (EPI) analyzed this disparity and found that CEO pay has increased 1,089% since 1978. In contrast, employee wages have only risen by 24%.
The highest-paid CEOs in 2024. According to The Journal, which used public compensation data from S&P 500 companies, Axon Enterprise CEO Rick Smith was the highest-paid executive in 2024. His company makes electric defense weapons, including Tasers. Smith earned $164.53 million in 2023.
Trailing him were some familiar names: General Electric CEO Lawrence Culp earned $88.95 million, and Blackstone CEO Stephen Schwarzman received an $84 million bonus.
You have to scroll to fourth place to find a tech CEO—Apple’s Tim Cook—who earned $74.61 million in total compensation.
Rich worker, poor worker. Regardless of how companies justify executive compensation, the data reveal a widening pay gap between CEOs and average workers. That doesn’t mean executives should earn the same as their employees—but proportionally, executive pay has far outpaced employee wages.
Between 1978 and 2023, CEO compensation at top S&P 500 companies rose 1,089%, while average worker pay increased by just 24%, according to the EPI.
A boom since the 1990s. Executive compensation hasn’t risen gradually. It soared in the 1990s and has remained high ever since. From 1964 to 1978, CEOs earned 15.4 to 23 times more than the average worker.
By 1990, that ratio had climbed to 44.9. By 2000, it exploded to 398 times the average salary. Economic and financial crises since then caused some fluctuations, but the ratio has remained between 190.6 and 330.2.
The elite of the elite. CEO pay has also surged relative to other high earners. The study tracked the ratio of CEO compensation to that of the top 0.1% of workers. Between 1964 and 1990, CEOs earned 2.6 to 3.1 times more than this elite group. But by the 2000s, the ratio had jumped to 9.2—and reached 9.4 in 2021.
Their influence counts for a lot. According to the report, this surge in CEO pay isn’t driven by exceptional decision-making skills or company performance. Instead, it reflects the CEOs’ influence over their boards of directors. “You should have board of directors meetings where people are asking, ‘Can we get away with paying our CEO less?’ But as far as I can tell, that question almost never gets asked,” Dean Baker, co-founder of the Center for Economic and Policy Research, told The Washington Post.
One example is Tesla CEO Elon Musk, who exerts enormous influence over a board stacked with personal allies, including his brother, Kimbal Musk. That influence helps him negotiate unusually generous compensation packages—an arrangement the report’s authors argue contributes to greater income concentration at the top and reduces profits shared with average workers.
A salary not tied to performance. Many assume high CEO pay reflects high performance, but the data challenge that assumption. “Rising CEO pay does not reflect a rising value of skills or contribution to firms’ productivity,” the EPI report states.
In 2024, for instance, Broadcom CEO Hock Tan earned $161.74 million, with the board justifying the pay based on the company doubling its market value. However, Enphase Energy CEO Badrinarayanan Kothandaraman received $19.52 million, despite the company losing 50.1% of its value.
Stock market slides. In the late 1990s and early 2000s, companies began offering stock-based compensation to tie executive pay to performance. In 2006, 78% of CEO compensation came from stock. By 2023, that figure was 76.6%. CEOs receive a bonus if they hit performance targets—otherwise, they get only a base salary.
According to consulting firm Equilar, this shift toward stock-based pay largely explains the exponential growth in CEO compensation. The rise in stock-heavy pay packages is directly linked to the boom in tech stocks, especially those driven by the AI wave.
Image | Giorgio Trovato (Unsplash)
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