S&P 500 CEO Pay Hits Record High as Musk Changes Executive Pay
Extraordinary corporate compensation deals for Elon Musk have created opportunities for the CEOs of other S&P 500 companies to achieve similar successes. A new study shows significant paydays. Even excluding the CEO of Tesla and SpaceX, average compensation for chief executives in the S&P 500 increased by 21% to $22.8 million in 2025, as reported by the American Federation of Labour and Congress of Industrial Organisations in data set to be released later on Thursday. That represents the peak level recorded since the leading US labour federation initiated its monitoring of this statistic in the 1990s. Driving the gains was an increasing number of mega-pay plans inspired by Musk’s compensation deal at Tesla worth as much as $1 trillion if he hits all possible targets, labour officials said. Last November, shareholders of the electric vehicle manufacturer approved a restricted stock plan that the company assessed at $158 billion.
Including that figure, average S&P 500 CEO pay reached $340.1 million last year, according to this year’s edition of the AFL-CIO’s widely followed Paywatch study. Musk also became the world’s first trillionaire, based on his stake in satellite and AI company SpaceX. Musk’s pay “changes the dynamic when other CEO compensation plans come up, boards use it as a reference,” Fred Redmond, the AFL-CIO’s secretary-treasurer, said in a telephone interview. Meanwhile, Redmond stated that employe wages are being constrained by the emergence of artificial intelligence and a National Labour Relations Board led by Republicans, who labour leaders perceive as antagonistic to union organising initiatives. Both factors contributed to an increase in the average ratio of CEO-to-worker pay, which reached 312:1 at S&P 500 companies last year, compared to 285:1 in 2024, excluding Musk’s Tesla compensation. When Musk’s Tesla compensation is factored in, the average pay ratio between CEOs and workers for the previous year stood at 5,387 to 1. “As we talk to our members, they’re pissed off over what’s happening to them, and they feel as though they should be more vocal in terms of calling attention to inequality,” Redmond said. He observed that union representation has reached its highest level in 16 years.
Rising CEO compensation and inequality are intertwined with larger political discussions regarding the challenges faced by US workers in affording essential needs such as housing and healthcare. Mean annual wages for all US workers stood at $69,770 as of May 2025, reflecting a 3% increase from the previous year, according to statistics from the US Labour Department. Compensation committees within boardrooms frequently assert that their remuneration strategies are aligned with shareholder value and serve to motivate executives to achieve results. It is observed that investors, particularly the largest asset managers, typically support the compensation plans during corporate annual meetings. Average support for advisory “say on pay” votes at S&P 500 companies reached 90.6% thru late June, as reported by compensation consulting firm Semler Brossy, an increase from 89.4% for the entirety of 2025. The trend does not consistently extend to the increase in special pay awards, as identified by Semler Brossy.
These awards, which are typically designed as one-time recognitions and operate independently of annual compensation structures, are a contentious topic,” the firm found. Among S&P 500 companies that disclosed special pay awards, Goldman Sachs compensated David Solomon with $118.9 million last year, which included a significant retention award. In an advisory vote, 71% of shares cast supported the pay, which is below the average. In response to enquiries, a representative from Goldman Sachs, Tony Fratto, remarked, “We’re very pleased with the strong supermajority this vote received.” Additionally, real estate investment trust Welltower compensated CEO Shankh Mitra with $821 million, intended to encompass the majority of his remuneration over the next ten years. Only 19% of shares cast supported the pay. “Welltower’s board and compensation committee remain committed to engaging with shareholders to gather their feedback and understand their perspectives,” a spokesperson said.
