While American workers struggle with higher prices and slowing wage growth, the executive suite is cleaning up. A new report shows the median CEO pay at S&P 500 companies has risen by 12 percent this year, the fastest increase in 14 years. At the same time, the average U.S. wage growth is 4.1 percent in the past year, barely ahead of inflation.
At the top of the CEO pay scale is Elon Musk, who recently had a $56 billion compensation package approved by Tesla shareholders. But beyond Musk's unique case, many major companies are offering and approving lucrative pay packages for executives amidst a highly competitive corporate environment. Bill Dendy, certified financial planner with Raymond James, says these numbers are a reflection of strong corporate earnings. "Many companies are still posting amazing bottom-line numbers, and many times a CEO's compensation is going to be tied to those bottom-line numbers," he tells KTRH. "So when we have growth and profitability, the board will increase the CEO's pay, but it doesn't happen every single year."
Dendy argues that looking at average employees versus CEOs is not an apples-to-apples comparison, as executive pay is much more volatile than a straight salary. "As an employee, you might be frustrated seeing the CEO get this huge increase, but the employee is more likely to see 3-4 percent every year, while the CEO is likely to see big bumps, then nothing for awhile," he says. "That's because a large part of CEO compensation is based on things like stock options, or the profitability of the company, or the price of the company's stock."
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