CEO Pay Up Nearly 10% in 2024, Driven by Stocks

CEO compensation for S&P 500 companies experienced a 10% increase in 2024 because of rising stock values and strong corporate financial performance. According to Equilar’s research for The Associated Press most executive compensation packages contained stock awards which directly linked executive pay to company performance.

The research evaluated compensation data from 344 CEOs who maintained their positions for two years at companies which submitted proxy statements from January through April. The median compensation package for these leaders reached $15.7 million because of the recent equity market growth.

Shareholders have been demanding that executive compensation systems should better reflect long-term corporate performance. Stock price and performance-based metrics now make up more of executive compensation which requires CEOs to achieve challenging targets before they can receive payment.

Stock performance-based compensation systems help executives share investor goals but sometimes lead them to make short-term decisions. According to Sarah Anderson who works as an executive pay analyst at the Institute for Policy Studies these compensation systems create substantial pressure on CEOs to achieve growth and deliver shareholder returns.

The S&P 500 index experienced a 20% increase during the previous year which brought positive effects to both stockholders and executive leaders. Companies defend their high executive compensation by stating that it helps them keep and inspire top-performing leaders.

The significant U.S. corporate profit growth during 2024 enhanced CEO compensation because technology firms along with financial institutions and consumer goods companies achieved their highest earnings ever.