What’s up with CEO salaries in the current economy?

In 2023, the global economy looks a lot different.

What’s up with CEO salaries in the current economy?
People are silhouetted at Canary Wharf business district in London May 1, 2007. Reuters/Luke MacGregor

In 2023, the global economy looks a lot different. With the war in Ukraine and an economy still shaken by the effects of a global pandemic, the global supply chain and energy costs have been upset. The cost of living has skyrocketed in many places. Plus, major companies, like Amazon, Microsoft and Disney, have held layoffs in the thousands.

But last year, the Economic Policy Institute released a report saying that “CEO pay has skyrocketed 1,460% since 1978.” And how much had a typical worker’s pay gone up in that same stretch of time? Only about 18.1%.

Alphabet and Google CEO, Sundar Pichai, got a pretty decent pay raise last year, even though the company had to cut 12,000 jobs. In 2022, he became one of the highest-paid CEOs in the US, taking home US$226 million, with most of it coming from stock awards.

CEO pay growth has been slowing down, though. Last year, total compensation for CEOs of S&P 500 companies rose 0.9%, reaching a median of US$14.8 million, according to data analyzed by Equilar. This is the smallest increase in CEO pay since 2015.

“I’m not surprised that after two record years in a row, pay hikes cooled somewhat,” said Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies. “What we shouldn’t lose sight of is that CEO pay is still off the charts by historical measures.” She also called the idea of even that small hike “outrageous.”

Not all CEOs are created equal, and some have, instead, taken massive pay cuts recently. This February, Zoom CEO Eric Yuan took a pay cut of 98% after the company cut 1,300 jobs, bringing his earnings to US$10,000. Apple CEO Tim Cook requested to take a 40% pay cut due to a loss in sales at the company, but that means he is still making US$49 million a year.

Still, the average CEO pay rose 7.7%, beating out the 6.4% inflation rate. Companies did cut back executive cash bonuses by an average of 6%, but those losses were made up in stock awards.

"Stock awards, which are the largest component of CEO pay packages by far, increased in value by 19.7% to US$13.8 million in 2022, the largest increase across all components," explains Amit Batish, Equilar's director of content. It’s worth noting that these increases "were granted at the beginning of the year prior when there was less economic uncertainty."