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New Data Shows CEOs Received Massive Raises in 2023 While Employees Struggled Amid Inflation

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New Data Shows CEOs Received Massive Raises in 2023 While Employees Struggled Amid Inflation

New Data Shows CEOs Received Massive Raises in 2023 While Employees Struggled Amid Inflation

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2023 was a big win for CEOs, with many receiving increased compensation for their job as leaders. For workers however, it was a different story. While they drowned in inflation, barely getting by with increased cost of living and meager pays, company leaders were getting raises. 

For most of the companies classified under S&P 500, CEOs enjoyed big salary raises going as high as 12% wage. Examples include Hock Tan of Broadcom Inc., William Lansing of Fair Isaac Corp, and Ted Sarandos of Netflix. Still, workers continue to grapple with the effects of inflation. 

What the Data Says

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Equilar analyzed data from 2023, revealing a massive disparity between CEOs and their employees. According to the report, CEOs’ experienced an average pay increased of $16 million, a whopping 12.6% increase from 2022’s data. Reportedly, this increase is a strategy to retain and encourage great work in CEOs.

Why Boards Act the Way They Do

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When a company’s board is so proud of your work that it decides to raise your pay package by over 10%, it is most likely because the company is doing extremely well in every sector, especially profits and stock prices. Many of the companies in the S&P 500 category have CEOs who were able to make that happen despite the unstable global economy. They were able to deal with the world before the pandemic, and they recovered spectacularly from it. 

Happy CEO Equals Happy Company?

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People have always known about the importance boards attach to CEOs, but this Equilar analysis has numbers and research to support the argument. It is a simple equation: a successful CEO knows how valuable they are. No board wants to lose them to competition, so they’ll do all they can to retain them. A desperation that always manifests in higher pay and even allowance packages. 

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How Employees Fared

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Equilar’s data analysis also revealed that compared to the 12.6% increase in pay packages CEOs enjoyed in 2023, wages for the workers whose hard work the company thrives on only increased by about 4.1%. 

The Huge Chasm Between Salaries

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According to the report, the gap between CEOs’ average earnings and workers’ median pay has never been wider. It would take an average employee from one of the surveyed companies around 200 years to make what CEOs made last year. And this was a typical case in at least half of all the companies they put under surveillance.

Critics of the Chasm

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Revelations from the data analysis have been making rounds on the internet and, by extension, the physical world. Many have criticized the huge gap. Analysts now say that such inequality is fueling Americans’ dissatisfaction with the economy, even though it is still doing relatively well.

Good or Bad Timing?

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The Equilar data analysis comes at a time of high inflation, which is terrible timing as far as many are concerned. It does not help that they now know that while their pay has not been increasing even in the face of high inflation, their CEOs have been earning more, gaining a better edge against what will ultimately drown them.

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The Gap is Always on the Increase

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In 2022, about half of the CEOs of the surveyed companies made 185 times more than what those they were recruited to manage made. In 2023, that value increased to 196 times and is poised to rise again this year.

The Widest Part of the Chasm

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According to Equilar’s data, companies that usually pay their workers lower wages on average pay their CEOs much more as they value them more. A worker is easily replaceable; a good CEO is not, which is why the disparity is most evident in their pay. One good example of a company where this happens is Ross Stores. An average worker there earned about $8,618, while their CEO, Barbara Rentler, received around $18.1 million in compensation in 2023.

There Have Also Been Higher Wages for Employees

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The chasm between CEOs and their workers may be wider than ever, but it does not mean the workers haven’t seen an increase at all with many employees recording higher wages in the last couple of years. In 2022, pay increased for private sector employees by 5.1%, and in 2023, it increased by 4.1%. It is a slow increase but it’s not nothing. 

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The Gap Will Never Stop Increasing

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How much CEOs earn and how fair it is has always been a hot topic, but nothing is likely to change, especially not the desire of boards to retain and encourage a CEO they think is an asset to the company. This means their pay packages will always be on the increase, and perhaps this is just fine if the workers can also have their wages increased by higher percentages. 

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