CEO pay growth reverts to historical norms

Median CEO pay climbed at many S&P 500 companies for the 2023 to 2024 filing period, indicating a return to historical norms in the growth of this compensation, according to early findings from ISS-Corporate, a provider of compensation, governance, cyber risk monitoring and sustainability offerings.

On April 30, ISS-Corporate shared early findings that the median CEO compensation at 343 of those large capital companies at which the CEO was in the same role for the current and previous filing years hit $15.7 million for the 2023 to 2024 filing period. This represents a 9.2% rise for that most recent period, which is above the 3.1% rise observed for the 2022 to 2023 period and on par with the 13.2% increase from the 2021 to 2022 filing period. Together, the data suggests a return to historical norms with regard to CEO pay growth, according to ISS-Corporate.

Roughly 70% of CEOs in the analysis received bigger pay packages for the 2023 to 2024 filing period than the prior filing period; approximately 27% of CEOs saw smaller payouts. 

The pay lifts are attributed in large part to a healthy stock market, with the S&P 500 index cinching a 24% gain for 2023. Among the companies that increased pay for their CEOs, the median change was 17.3%, while pay decreased by a median of 7.5% among companies that decreased pay for their CEOs. 

CEO pay changes were largely driven by rises in the value of stock and option awards, and the largest changes in pay occurred in industries including consumer services and transportation, according to ISS-Corporate. 

"Large company disclosures so far suggest a return to historical norms for U.S. CEO pay growth with the slower rate of growth evidenced last year likely looking to be an aberration," Roy Saliba, managing director at ISS-Corporate, said in an April 30 news release. "The stock market continued to show resilience and exceeded most expectations during the same period as evidenced by the strong performance of many companies even when faced with higher interest rates and tighter monetary policy, potentially allaying pay and performance alignment concerns as CEO pay continues to rise."

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