Median CEO pay in US hits record high even as markets tumble

There has been ongoing debate among workers and progressives over the significant differences in CEO pay.

A recent study revealed that median pay for top US CEOs reached a new high of $16.8 million in 2024, marking a 7.5 percent increase. This surge in earnings is largely attributed to substantial stock grants received by CEOs, far surpassing the compensation of American workers.

According to ISS-Corporate, CEOs of companies like Axon and Union Pacific saw substantial pay increases due to stock awards. Roy Saliba, managing director at ISS-Corporate, noted that these pay decisions were made during the stable period of 2023, before the trade war initiated by President Donald Trump caused market turmoil.

Saliba emphasized that these pay decisions do not align with current market conditions and suggested that companies should hold off on altering compensation plans due to market uncertainties. He recommended boards to consider different performance metrics to evaluate executives’ work relative to their peers.

The study, which examined pay data from 320 S&P 500 companies, revealed that CEOs performed well financially. While US workers saw a 4 percent increase in average hourly earnings in 2024, inflation was below 3 percent. The companies included in the study outperformed these rates, with a median total shareholder return of 15.1 percent.

For instance, Axon’s CEO Patrick Smith’s pay skyrocketed to $164.5 million in 2024, mainly due to stock units incentivizing future performance. Union Pacific’s CEO James Vena received $17.6 million in 2024, with a significant portion tied to performance-based stock and option awards.

Progressive Democrats, led by Senator Bernie Sanders, have long criticized exorbitant CEO pay. Despite legislative attempts to increase taxes on companies with high executive compensation ratios, such measures have yet to be enacted. Sanders highlights the widening gap between CEO pay and that of the average worker over the past few decades.