CEOs got hefty pay raises in 2023, widening the gap with the workers they oversee
CEOs got rewarded as the economy showed remarkable resilience, underpinning strong profits and boosting stock prices. After navigating the pandemic, companies faced challenges from persistent inflation and higher interest rates. About two dozen CEOs in the AP's annual survey received a pay bump of 50% or more.
«In this post-pandemic market, the desire is for boards to reward and retain CEOs when they feel like they have a good leader in place,» said Kelly Malafis, founding partner of Compensation Advisory Partners in New York. «That all combined kind of leads to increased compensation.»
But Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, believes the gap in earnings between top executives and workers plays into the overall dissatisfaction among Americans about the economy.
«Most of the focus here is on inflation, which people are really feeling, but they're feeling the pain of inflation more because they're not seeing their wages go up enough,» she said.
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 median stock award rose almost 11% last year compared to a 2.7% increase in bonuses.
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