CEOs Earn 200 Times More Than Their Workers Last Year
2024-06-09
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1The top leaders of the biggest U.S. companies had their pay increase by about 13 percent in 2023.
2Pay for workers at the same companies rose by only 4.1 percent.
3Those numbers come from the Associated Press (AP) and the financial research company Equilar.
4They compared pay for more than half of the chiefs of a list of top companies called the S&P 500 with other average workers at the same companies.
5At half of the companies that AP and Equilar studied, it would take the average worker almost 200 years to make what the chief executive officer made in one year.
6Company chiefs received pay gains as the U.S. economy showed strength in 2023.
7Over 20 of the company leaders received a pay increase of 50 percent or more.
8Kelly Malafis is one of the founders of Compensation Advisory Partners in New York City.
9The company advises businesses on what to pay their top leaders.
10Malafis said companies want to reward and keep their chiefs if they have a good leader in place.
11"That all combined kind of leads to increased compensation," she said.
12Some of the leaders who had high compensation compared to average workers included Ted Sarandos of Netflix and Tim Cook of Apple.
13Cook's pay was over $63 million. For Sarandos, his pay was almost $50 million.
14Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington D.C.
15She said the earnings gap leads to bad feelings about the American economy.
16She said many people are worried about inflation - the rising prices for things such as food, housing and gasoline.
17In addition, she said, "they're feeling the pain of inflation more because they're not seeing their wages go up enough."
18The study shows that a number of companies decided to link pay raises to company performance.
19As a result, the increases come in the form of stock awards that the leaders cannot sell for several years.
20Many of the pay packages prevent a stock sale unless the company reaches targets such as greater market value.
21Median stock awards went up 11 percent last year while performance increases only rose 2.7 percent.
22The AP's study included the pay of 341 executives at companies in the S&P 500.
23It only included leaders who had been in their positions for at least two full years.
24Hock Tan of the software and semiconductor company Broadcom earned the most - about $162 million.
25Tan was born in Malaysia. His pay package includes a number of increases based on the company's stock price.
26At the time the package was set, the company's share price was $470, now it is well above $1000.
27He will get a number of bonuses if the price remains above $1,125 between October 2025 and October 2027.
28Much of Broadcom's success comes from the current interest in AI, or artificial intelligence.
29Another company leader, Elon Musk of Tesla, is in the middle of a legal case related to his pay.
30Musk wants the company's shareholders to restore a pay package that was restricted by a judge in Delaware.
31The company agreed to a stock package worth $2.3 billion in 2018 but it is now estimated to be worth about $45 billion.
32Some workers in clothing or food stores make very little money.
33In some cases, they do not work full time.
34One clothing seller in the U.S. is Ross Stores.
35Its leader is Barbara Rentler. She made $18.1 million last year.
36Some part-time workers make less than $9,000.
37Malafis said many companies that are doing well do not want to have their leader leave.
38As a result, they pay based on what other large companies pay and do not consider the difference between the chief, or CEO, and the average worker.
39Research shows that during the 40 years after the end of World War II, executives earned about 40 to 50 times more than their employees.
40After the 1980s, the compensation structure started to change.
41Brandon Rees is a deputy director for the AFL-CIO, a group of labor unions.
42Rees said, "The (current) pay ratio signals a sort of a winner-take-all culture, that companies are treating their CEOs as, you know, superstars as opposed to, team players."
43Even with the criticism, shareholders usually approve the pay deals.
44Most shareholder votes between 2019 and 2023 showed nearly 90 percent approval.
45Even if the vote shows shareholders are not happy with the executive's pay, the company's board can overrule the shareholders.
46That is what happens in most cases.
47However, investors rejected the pay deal for Netflix's top leaders.
48That resulted in the media company making some changes.
49Top leaders Sarandos and Greg Peters will be paid in 2024 with stock that has restrictions about when it can be sold.
50Anderson from the Institute for Policy Studies said the pay votes can be helpful because they "shine a light on" pay that is too much.
51However, she said, the votes do not result in big changes most of the time.
52The pay study also gave information about women CEOs.
53In 2023, the top-paid female CEO was Lisa Su of the computer chip maker AMD.
54She received just over $30 million in compensation.
55Other top earners were Mary Barra of carmaker General Motors, Jane Fraser of bank group Citigroup and Kathy Warden of defense company Northrop Grumman.
56They earned between $23 million and $28 million in 2023.
57Overall, the pay for female leaders went up 21 percent while the pay for men went up 12 percent.
58I'm Dan Friedell. And I'm Jill Robbins.
1The top leaders of the biggest U.S. companies had their pay increase by about 13 percent in 2023. 2Pay for workers at the same companies rose by only 4.1 percent. 3Those numbers come from the Associated Press (AP) and the financial research company Equilar. They compared pay for more than half of the chiefs of a list of top companies called the S&P 500 with other average workers at the same companies. 4At half of the companies that AP and Equilar studied, it would take the average worker almost 200 years to make what the chief executive officer made in one year. Company chiefs received pay gains as the U.S. economy showed strength in 2023. Over 20 of the company leaders received a pay increase of 50 percent or more. 5Kelly Malafis is one of the founders of Compensation Advisory Partners in New York City. The company advises businesses on what to pay their top leaders. 6Malafis said companies want to reward and keep their chiefs if they have a good leader in place. 7"That all combined kind of leads to increased compensation," she said. 8Some of the leaders who had high compensation compared to average workers included Ted Sarandos of Netflix and Tim Cook of Apple. Cook's pay was over $63 million. For Sarandos, his pay was almost $50 million. 9Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington D.C. She said the earnings gap leads to bad feelings about the American economy. 10She said many people are worried about inflation - the rising prices for things such as food, housing and gasoline. In addition, she said, "they're feeling the pain of inflation more because they're not seeing their wages go up enough." 11The study shows that a number of companies decided to link pay raises to company performance. As a result, the increases come in the form of stock awards that the leaders cannot sell for several years. Many of the pay packages prevent a stock sale unless the company reaches targets such as greater market value. Median stock awards went up 11 percent last year while performance increases only rose 2.7 percent. 12The AP's study included the pay of 341 executives at companies in the S&P 500. It only included leaders who had been in their positions for at least two full years. 13Hock Tan of the software and semiconductor company Broadcom earned the most - about $162 million. Tan was born in Malaysia. His pay package includes a number of increases based on the company's stock price. At the time the package was set, the company's share price was $470, now it is well above $1000. He will get a number of bonuses if the price remains above $1,125 between October 2025 and October 2027. 14Much of Broadcom's success comes from the current interest in AI, or artificial intelligence. 15Another company leader, Elon Musk of Tesla, is in the middle of a legal case related to his pay. Musk wants the company's shareholders to restore a pay package that was restricted by a judge in Delaware. The company agreed to a stock package worth $2.3 billion in 2018 but it is now estimated to be worth about $45 billion. 16Lack of equality 17Some workers in clothing or food stores make very little money. In some cases, they do not work full time. One clothing seller in the U.S. is Ross Stores. Its leader is Barbara Rentler. She made $18.1 million last year. Some part-time workers make less than $9,000. 18Malafis said many companies that are doing well do not want to have their leader leave. As a result, they pay based on what other large companies pay and do not consider the difference between the chief, or CEO, and the average worker. 19Research shows that during the 40 years after the end of World War II, executives earned about 40 to 50 times more than their employees. After the 1980s, the compensation structure started to change. 20Brandon Rees is a deputy director for the AFL-CIO, a group of labor unions. Rees said, "The (current) pay ratio signals a sort of a winner-take-all culture, that companies are treating their CEOs as, you know, superstars as opposed to, team players." 21Even with the criticism, shareholders usually approve the pay deals. Most shareholder votes between 2019 and 2023 showed nearly 90 percent approval. Even if the vote shows shareholders are not happy with the executive's pay, the company's board can overrule the shareholders. 22That is what happens in most cases. However, investors rejected the pay deal for Netflix's top leaders. That resulted in the media company making some changes. Top leaders Sarandos and Greg Peters will be paid in 2024 with stock that has restrictions about when it can be sold. 23Anderson from the Institute for Policy Studies said the pay votes can be helpful because they "shine a light on" pay that is too much. However, she said, the votes do not result in big changes most of the time. 24The pay study also gave information about women CEOs. In 2023, the top-paid female CEO was Lisa Su of the computer chip maker AMD. She received just over $30 million in compensation. Other top earners were Mary Barra of carmaker General Motors, Jane Fraser of bank group Citigroup and Kathy Warden of defense company Northrop Grumman. They earned between $23 million and $28 million in 2023. 25Overall, the pay for female leaders went up 21 percent while the pay for men went up 12 percent. 26I'm Dan Friedell. And I'm Jill Robbins. 27Dan Friedell adapted this story for Learning English based on a report by the Associated Press 28_____________________________________________ 29Words in This Story 30reward -n. something that is given in return for something that has been done or might be done 31compensation -n. (business) money and other things of value that are given to a person for the work they do 32gap -n. a difference between two values 33wages -n. (pl.) pay that is usually by the hour 34median -n. the middle number in a series from largest to smallest 35ratio -n. the relationship between two values 36We want to hear from you. How do the top leaders of companies where you live get paid?