Billionaires and CEOs of large companies earn an annual salary equal to that of 2-3 generations of employees.

According to a survey by the Associated Press and Equilar, the median CEO compensation package rose 9.7% to $17.1 million. At the same time, the median employee at those companies received a modest 1.7% increase, bringing their income to $85,419.

These numbers are more than mere statistics, painting a vivid picture of disparities and raising urgent questions: What is driving the explosion in executive income, and what does it reveal about the power structure and distribution of wealth within modern corporations?

A smooth year and the CEO's formula for success

The economic landscape in 2024 is fertile ground for CEO compensation growth. Despite recession fears, consumers are spending heavily, inflation is cooling, and the labor market remains strong.

Most importantly, the stock market had a stellar year. The S&P 500, a gauge of the health of U.S. stocks, rose more than 23 percent. Profits for companies in the index also rose more than 9 percent.

“2024 was already forecast to be a positive year, so a near 10% increase is consistent with when compensation decisions are being made,” said Dan Laddin, partner at consultancy Compensation Advisory Partners.

This success has not come by accident. Many companies, under pressure from shareholders, have increasingly tied CEO compensation to performance. The formula has become clear: compensation is not just a fixed salary, but a large part of it comes from huge stock awards.

These bonuses aren't instant "cash"; they're conditional promises. CEOs can only "unlock" their full value if the company hits ambitious multi-year goals, usually in terms of stock price, market value, or operating profit.

“For CEOs, long-term bonuses typically increase more each year than salaries or short-term bonuses. Given their pivotal role in the executive compensation mix, this trend is understandable,” explains Melissa Burek, also of Compensation Advisory Partners.

Salary "kings" and billionaires receive symbolic salaries

The 2024 compensation rankings list names with staggering numbers.

At the top of the list is Rick Smith, founder and CEO of Axon Enterprises, with a compensation package of $164.5 million. Axon, the company known for its Taser guns and body cameras, had a record year, with revenue up more than 30% and net income of $377 million. The company’s stock has more than doubled, and the bulk of Smith’s pay comes from stock awards tied to the company’s performance through 2030.

The next positions are no less impressive: Lawrence Culp of GE Aerospace ($87.4 million), Tim Cook of Apple ($74.6 million), David Gitlin of Carrier Global ($65.6 million) and Ted Sarandos of Netflix ($61.9 million).

But there are interesting exceptions in the CEO world . Famous billionaires like Berkshire Hathaway's Warren Buffett earn just $405,000. Meanwhile, Tesla's Elon Musk will not receive any compensation through 2024, but is still in a legal battle over a massive $56 billion compensation package approved in 2018.

Lương tỷ phú, CEO công ty lớn thế giới một năm bằng nhân viên làm 2-3 đời - 1 — Apple CEO Tim Cook is one of the highest-paid S&P 500 CEOs in 2024 (Photo: Getty).

Income Chasm: When Numbers Don't Lie

If the story were simply about CEOs being paid fairly for their performance, it might not have caused so much controversy. The problem lies in the widening gap between the top and bottom of the corporate income pyramid.

At half of the companies surveyed by AP, an employee with a median salary would have to work 192 years straight to earn what their CEO makes in just one year.

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)'s "Executive Paywatch 2024" report revealed an even more shocking figure: the average CEO-to-worker pay ratio at S&P 500 companies in 2024 will be 285:1, up from 268:1 the previous year. To put that in perspective, in 1965, the ratio was only 20:1.

The numbers are especially inflated in low-wage, labor-intensive industries. At Carnival Corp., the CEO makes nearly 1,300 times as much as his employees. At McDonald’s, the ratio is about 1,000 times. Starbucks’ new CEO, Brian Niccol, has a compensation package of more than $95 million, pushing the ratio at the coffee chain to an incredible 6,666:1.

Amid the overall contrasts, there are some bright spots. This year’s survey recorded 27 female CEOs, the highest number since 2014.

Notably, their median income increased 10.7% to $20 million, higher than both the overall median and the increase of their male counterparts ($16.8 million, up 9.7%). The leader was Otis Worldwide's Judith Marks with a compensation package of $42.1 million.

Experts remain cautious, however. Utah State University professor Christy Glass warns that despite the addition of a few new names, the overall trend toward gender equality in leadership ranks is slowing, especially as many companies cut back on diversity, equity, and inclusion (DEI) programs.

Another notable trend is the sharp increase in CEO personal security spending. The median security spend has increased from $69,180 in 2023 to $94,276 in 2024. This move is believed to be a response to the attack on the CEO of UnitedHealthCare late last year, highlighting the invisible risks and pressures facing senior leaders.

The 2024 CEO pay numbers don't simply reflect a successful business year, but tell a more complex story about the wealth created and how it is distributed.

On one side is the well-deserved reward for the talented leaders who have steered the ship of business through the storm. On the other side is the ever-deepening chasm between the ivory tower of the executive class and the lives of those who contribute to creating value for the business every day.

Source: https://dantri.com.vn/kinh-doanh/luong-ty-phu-ceo-cong-ty-lon-the-gioi-mot-nam-bang-nhan-vien-lam-2-3-doi-20250827204548592.htm