S&P 500 CEO pay up 10% as stock prices and profits soar

Time of India

5 days ago

New York: 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 or market value or improved operating profits.
The Associated Press' CEO compensation survey, which uses data analysed for The AP by Equilar, included pay data for 344 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between January 1 and April 30.
Here are the key takeaways from the survey:
A Good Year
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The median pay package for CEOs rose to $17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned $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 tail winds: Consumers kept spending despite their misgivings about the economy; inflation did subside somewhat; the Fed lowered interest rates; and the job market stayed strong.
The stock market's main benchmark, 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.
Top earners
Rick Smith, founder and CEO of Axon Enterprises, topped the survey with a pay package valued at $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 $377 million in 2024. Axon's shares more than doubled last year after rising more than 50% in 2023.
Other top earners in the survey include Lawrence Culp, CEO of what is now GE Aerospac e ($87.4 million), Tim Cook at Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million) and Ted Sarandos at Netflix ($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."