How Has CEO Pay Increased by Over 1000% in Under 60 Years?
Elon Musk’s US$1tn compensation package from Tesla, and Pope Leo calling out the exec over his astonishing wealth, have put CEO pay as a popular topic in the news recently.
The huge US$1tn compensation offer, which was proposed by Tesla on 5 September, has the potential to be the largest corporate pay award in history.
Pope Leo XIV singled out Musk in his first interview since becoming the head of the Catholic Church in May 2025, published on Catholic news website Crux, that the wealth of the tech billionaire is undermining “the value of human life”.
According to a report by the Economic Policy Institute (EPI), a Washington-based think tank conducting economic research, CEO pay has rocketed.
It offers the overarching statistic that execs’ pay has grown 1094% in the nearly 50 years since 1978, compared with a 26% increase in a typical worker’s compensation.
What is outlined in the report?
The EPI report, released on 25 September, offers insights into CEO pay, drawing on data from 1965 to 2024 – noting that the pay for CEOs of the 350 largest firms in the US increased in 2024, averaging at US$23m dollars.
The report outlines that the ratio of CEO compensation to typical worker pay grew more than three times since 1992 – noting that stock-related components constitute a large and growing share of CEO compensation.
EPI’s data shows that stock-related pay – covering exercised stock options and stock awards – averaged US$18.2m in 2024, accounting for 79% of the averaged realised compensation.
It also says that the stock-related components are shifting away from the use of stock options and towards stock awards over time.
In 1992, stock options accounted for 85% of stock-related pay in realised CEO compensation versus only 31% in 2024, with vested stock awards adding up to the remaining 69%.
What does this mean for CEOs and their companies?
Stock options give CEOs the right to buy company stock at a set price in the future. This means that with increasing stock prices, execs make money, and if stocks go down, they lose nothing.
In contrast, stock awards – actual shares or promised shares – mean that the value goes up or down with the company’s stock price.
Putting the pay in perspective
The EPI report says that this increase in the pay of CEOs makes their average earnings “281 times that of the typical worker”, compared to 21 times as much as the typical worker in 1965.
Over the 2009-2021 period, a surge in realised CEO compensation took the ratio to 408-1, which then experienced significant declines between 2021 and 2023, according to EPI.
But even with recent declines, the report highlights that the ratio in 2024 remains far higher than it was at the end of the 20th century.
Musk’s windfall reflects broader upward trend
To receive this enormous US$1tn benefit, Musk must meet multiple ambitious targets over the next decade in order to receive the payout, including boosting the company’s valuation by around US$7.5bn, Tesla says.
All compensation will be related to performance and awarded as he meets goal milestones, the first is to reach a market capitalisation of US$2tn, the following nine require an extra $500bn, while the last two each demand an additional US$1tn.
Discussing Tesla’s announcement at the time, Pope Leo said: "Yesterday, there was the news that Elon Musk is going to be the first trillionaire in the world.”
“What does that mean and what’s that about? If that is the only thing that has value anymore, then we’re in big trouble”, he added.