As profits rose, CEO salaries rose 17% in 2021; workers lag behind

Even when regular employees get the biggest raises in decades they are still compared to what CEOs get.

As profits rose, CEO salaries rose 17% in 2021; workers lag behind

Even when regular employees get the biggest raises in decades they are still compared to what CEOs get.

According to Equilar data, the average compensation package for chief executives of S&P 500 companies soared 17.1% to $14.5 million last year.

This gain is more than the 4.4% increase of wages and benefits that private-sector workers received through 2021. It was the fastest recorded since 2001. Many rank-and-file workers saw their wages decline in line with inflation which was 7% at last year's end.

As the economy recovered from its short 2020 recession, stock prices and profits rose sharply, CEO compensation soared. After years of relatively slow growth, CEOs' pay packages exploded because so much of their compensation is tied to this performance.

Expedia Group's package valued at $296.2 Million and JPMorgan Chase’s $84.4 Million, were two of the most notable. Boards gave stock options or stock grants to CEOs who recently took over the company's management during the pandemic. They also granted stock options or stock stock options to existing leaders that they wanted to persuade to stay.

If the company is meeting its performance targets, CEOs may not be able to cash in stock options or stock options for many years. Companies still have to disclose their estimates of how much they are worth. About 25% of the average pay package for S&P 500 CEOs was in cash.

No matter what the composition of the company, the gap in pay between CEOs (and the workers below them) continues to widen. It would take at least 186 years for a worker in the middle of a company's salary scale to earn the same amount as their CEO. This is despite the fact that half of the companies included in this year's survey. This is an increase of 166 from last year.

Walmart's median associate earned $25,335 last year, according to the company. This means that half of Walmart's workers earned more and half made less.

This is 21% more than $20,942 last year. It also came as the average hourly wage for U.S. employees rose from $14.50 in Jan 2021 to over $17 now. This was a percentage increase that Doug McMillon received, which was more than the CEO's raise. His 13.7% raise brought him a total package of $25.7 million.

This imbalance is causing anger. According to surveys, Americans of all political parties consider CEO pay too high. Some investors are responding.

Workers across the country are organizing unions. The "Great Resignation," which has energised millions of people to leave their jobs to seek better ones elsewhere, has encouraged them to do so. In April 2021, the United States government recorded more than 4,000,000 quits. This was the first time this has happened. Since then, the monthly total has surpassed 4.5 million twice.

Sarah Anderson, Director of the global economy project of the progressive Institute for Policy Studies, stated that this would add significant cost to corporate bottom line.

Anderson stated that they should think about the message they are sending to these people and whether they feel valued in their jobs. Anderson said, "When the guy at the corner office makes several hundred, if not thousands more, that sends a demoralizing message."

The median increase in CEO pay has slowed in recent years. It fell from 8.5% in 2017 and 4.1% in 2019, with the median increase in 2017. The median rise in CEO pay was 4.1% in 2019, up from 8.5% in 2017. This was complicated by the pandemic that decimated the economy and many companies lost profits.