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A CEO’s Annual Compensation is Equivalent to Five Lifetimes Worth of Employee Work According to a Report

The employee’s salary is significantly lower compared to that of their employer.

Disparities in wages between employees and CEOs. (Photo: Google)

Despite that CEO pay experienced a slight decrease from the previous year, the decline was significantly smaller than the drop in stock prices during the same timeframe. The average CEO of S&P 500 companies earned a significant amount of $16.7 million in compensation last year.

According to an article published by CNN Business, the annual compensation disparity between CEOs and their employees, already substantial, is at risk of worsening due to the influence of AI, warns a report by AFL-CIO.

The report highlights that the average annual compensation for CEOs of S&P 500 companies reached $16.7 million last year, marking the second-highest level on record. Despite a decrease in CEO annual compensation compared to the previous year, the decline was much less pronounced than the drop in stock prices.

The 2022 decline in the S&P 500 was 18%, whereas the average CEO’s annual compensation only saw a 9% decrease. This disparity is highlighted by the fact that the average CEO’s compensation, based on their annual compensation package, would take a regular employee over five lifetimes to earn. This assumption considers an average annual compensation of $75,200 over a 45-year career.

The report also underscores the role of boards, often composed of executives benefiting from the system, in determining CEO annual compensation. Additionally, the study notes that US workers experienced a 1.6% decline in real hourly wages in 2022 for the second consecutive year after adjusting for inflation.

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The latest annual compensation pay report highlights a significant concern regarding the potential for artificial intelligence (AI) to disproportionately benefit executives over employees.

Based on a report by Yahoo Finance, AFL-CIO Secretary-Treasurer Fred Redmond acknowledges that while AI has the potential to bring widespread prosperity and improve working conditions, unchecked AI adoption could exacerbate economic inequality and job insecurity.

Redmond emphasizes the importance of worker involvement in AI implementation and decision-making, citing instances such as the Hollywood strike where AI has become a central issue. CEOs’ are criticized for rapidly integrating AI into their businesses without adequately safeguarding workers’ interests, making one of the reasons for the surge in CEOs’ annual compensation.

The labor movement supports technological innovations but insists that workers should have a say in how new technology is utilized.

The debate extends to sectors like film and TV, where AI-generated content is criticized as potentially infringing on creative work. The call is made to hold companies accountable for annual compensation executive and to address the concerns of workers regarding the use of AI in ways that may replace their roles.

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