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CEOs got big pay raises in 2023, widening the gap with the workers they oversee

NEW YORK — The typical compensation program for S-company executives&The P 500 jumped nearly 13% last year, far outpacing gains for workers at a time when inflation was putting significant pressure on U.S. budgets.

Median CEO pay was $16.3 million, up 12.6%, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits for private-sector workers increased 4.1% through 2023. At half of the companies surveyed in AP’s annual wage survey, it would take nearly 200 years to the worker in the middle of the company’s pay scale for doing what its CEO did.

“In this post-pandemic market, boards want to reward and retain CEOs when they believe they have a good leader in place,” said Kelly Malafis, founding partner of Compensation Advisory Partners in New York.

The AP CEO Compensation Survey included salary data for 341 S executives&P 500 companies that have had at least two consecutive full fiscal years in their business and have filed proxy statements between January 1 and April 30.

Broadcom CEO Hock Tan topped the AP survey with compensation valued at about $162 million.

Broadcom awarded Tan shares worth $160.5 million on October 31, 2022 for the company’s 2023 fiscal year. Tan had the option to earn up to 1 million shares starting in fiscal 2025, according to a securities filing, provided Broadcom’s stock hits certain targets — and he remains CEO for five years.

At the time of grant, Broadcom stock was trading at $470. The stock has skyrocketed since then and reached an all-time high of $1,436.17 on May 15. Tan will receive the full prize if the average closing price is equal to or greater than $1,125 for 20 consecutive days between October 2025 and October 2027.

Broadcom noted that under Tan, its market value increased from $3.8 billion in 2009 to $645 billion (as of May 23) and that the total return to its shareholders during this period easily exceeded that of the S .&500 P.

Other CEOs topping AP’s survey are William Lansing of Fair Isaac Corp. ($66.3 million); Tim Cook of Apple Inc. ($63.2 million); Hamid Moghadam of Prologis Inc. ($50.9 million); and Ted Sarandos, co-CEO of Netflix ($49.8 million).

Lisa Su, CEO of chipmaker Advanced Micro Devices, was the highest-paid female CEO in the AP survey for the fifth consecutive year in fiscal 2023, bringing in compensation valued at $30.3 million, i.e. an amount identical to his compensation program in 2022. His overall ranking fell from 25 to 21.

Workers across the country have achieved higher wages since the pandemic, with wages and benefits for private sector employees increasing 4.1% in 2023 after a 5.1% increase in 2022, according to the Department of Health. Work.

Even with this progress, the gap between the person in the corner office and everyone else continues to grow. Half of the CEOs surveyed in this year’s salary survey earned at least 196 times their employee’s median salary. This is an increase from the figure of 185 seen in last year’s survey.

The disparity between what the CEO earns and what workers earn has not always been this great.

After World War II and into the 1980s, CEOs of large publicly traded companies earned about 40 to 50 times the average worker’s salary, said Brandon Rees, deputy director of corporate and capital markets at the ‘AFL-CIO, which operates an Executive Paywatch website. which tracks CEO compensation.

“The (current) salary ratio signals a sort of winner-takes-all culture, where companies treat their CEOs like, you know, superstars rather than team players,” Rees said.

Despite the criticism, shareholders tend to overwhelmingly support the salaries of company executives. From 2019 to 2023, companies generally received just under 90% of the votes for their executive compensation plans, according to Equilar data.

However, sometimes shareholders reject a compensation plan, even if the votes are not binding. In 2023, shareholders of 13 S-companies&P 500 gave less than 50% support to the salary package.

Sarah Anderson, who directs the global economy project at the Progressive Institute for Policy Studies, said the Say on Pay votes are important because they “highlight some of the most egregious cases of executive access, and can lead to wage and salary negotiations.” other issues that shareholders might want to raise with company management.

After its investors again resoundingly rejected its top executives’ pay packages, Netflix met with many of its largest shareholders last year to discuss their concerns.

Following the discussions, Netflix announced several changes aimed at rethinking its salary policies. On the one hand, it eliminated executives’ choice to split their compensation between cash and options. It will no longer offer stock options, which can give executives a salary as long as the stock price stays above a certain level. Instead, the company will offer restricted stock that executives can only benefit from after a certain period of time or after certain performance measures have been achieved.

The changes will come into effect in 2024.

More generally, the so-called pay votes didn’t make much of a difference, Anderson says. “I think the impact, certainly on the overall size of CEO packages, hasn’t had much effect in some cases.”

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Ortutay reported from San Francisco. Reporters Stan Choe and Ken Sweet contributed.

ABC News

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