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Key Takeaways
The median CEO pay in the S&P 500 has increased by 4% annually from 2012 through 2023, even with a pronounced increase 11% in 2023. The rate of CEO pay movement is aligned with general wage growth across the US Economy (4% since 2012 per the Social Security – Average Wage Index), which runs counter to the broader narrative that executive pay outpaces wages. That said, a large portion of executive pay comes from equity-based compensation, which is influenced by stock market performance. The 4% annualized growth number doesn't factor in realized pay gains from a strong market (14% CAGR from 2012 to 2023 in an S&P500 index assuming re-invested dividends).
CEO Pay Increased at an Annualized Rate of 4% Since 2012
Elements of CEO Pay
Compensation elements have shifted to focus more on equity over the last ten years. Base salary and bonus compensation have become less prominent in pay design and have been replaced by more emphasis on long-term incentive (LTI) vehicles (RSUs, Options, PSUs). In 2023, the median LTI grant was $10.6MM, up from in 2012. On average, LTI is 66% of compensation for CEOs (versus 54% in 2012).
Other compensation benefits have become a far less prominent component of executive pay. Only 154 companies in 2022 provided CEO pension benefits vs. 269 in 2012, leading to a significant decrease in the percentage of all other compensation.
The S&P 500 has experienced a steady increase in CEO pay, with +4% annualized growth at the median since 2012, while the tech sector has had faster growth at +6%. We refer to the“tech sector” as companies with the GICS categorization of“Communication Services” or“Information Technology,” which includes the big tech plays (e.g., Apple, Alphabet, Amazon, etc.), SaaS, as well as tech hardware companies. The largest jump in the tech space happened in 2021, driven by the hot talent market through the pandemic.
11-Year Compound Annual Growth Rate of S&P500 Median Total Pay for CEOs
Methodology and Assumptions
This research considers the following assumptions and methodology. Pulse on Pay is published bimonthly.
Disclosed Summary Compensation Table (“SCT”) figures (e.g., total compensation, all other compensation, stock awards, etc.)
The S&P 500 experiences changes throughout the year; therefore, each constituent list is curated as of 12/31 for each given year (e.g., 2012 fiscal year includes companies in the S&P500 as of 12/31/2012)
Sector constituents are categorized based on GICS code
Includes new hire CEOs, including their new hire grants
Excludes partial-year CEO terminations
All data is provided by Main Data Group
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MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.