CEO pay dropped in 2023—but it’s not clear why

For decades, chief executive pay has climbed precipitously, buttressed by generous stock awards and six-figure bonuses. Since 1978, CEO compensation has spiked by 1,085%, a far cry from the 24% bump in pay that the average worker has seen.

In 2023, however, overall CEO compensation—which includes salary, bonuses, stock awards, and stock options—actually dropped by nearly 20%, according to a recent analysis by the Economic Policy Institute (EPI). That means CEOs were only paid 290 times as much as the average worker, a sharp decline from previous years. (Just a year before, in 2022, CEOs received 360 times the pay of the average worker.)

As the Washington Post reports, however, it’s not clear why this is the case, since chief executive pay usually mirrors stock market performance. EPI researchers have said it’s unusual to see a dip in CEO compensation during a year when the stock market was strong—which means this could either be an anomaly, or perhaps indicate a broader shift in how CEOs are paid.

The EPI analysis also notes that it could just be that CEOs are receiving more stock awards, rather than options, which could be “a promising move to align CEO pay to longer-term incentives.” (Another report by Equilar earlier this year found that median total compensation for CEOs increased by 12.6% to $16.3 million, though its methodology and criteria differ from the EPI analysis.)

It seems unlikely, however, that this signals a more sweeping change, given how steadily CEO compensation has increased over the years, even amid growing outrage over bloated pay packages. As Fast Company noted in a special report on CEO pay last year, unions and politicians have drawn attention to the yawning pay disparities between employees and CEOs, particularly as more workers have gone on strike.

Fast Company‘s analysis of CEO pay—conducted in partnership with MyLogIQ—found that some of the “least fairly paid” chief executives had pay packages worth many thousands of times the median pay for their workers. Even shareholders have realized sky-high CEO compensation can be a liability, as it invites greater scrutiny and regulation in the interest of more transparency. But the question is whether mounting public pressure will actually move the needle on CEO compensation—or if it’s already too far gone.