CEO pay resets to $22.8m as the Musk package becomes a comp-committee input

The AFL-CIO's annual survey, cited by Reuters on the 13th, put average pay for S&P 500 chief executives at $22.8 million last year excluding Elon Musk, a 21% rise and the highest reading since the federation began compiling the data in the 1990s ^[1][2][3]. The average annual wage for all US workers was $69,770 as of May last year, up 3% ^[8], which means executive pay grew about seven times faster than the wage bill underneath it ^[1] and turns this from a disclosure curiosity into a bargaining-table input.

The mechanism is anchoring. Tesla has built a plan for Musk that could reach $1 trillion if every business target is met ^[5], and AFL-CIO Secretary-Treasurer Fred Redmond says the effect is on the conversation, not just the recipient: "Musk's compensation changes the dynamics when other CEO pay packages are being discussed," with boards using it as a reference point ^[6]. The scale distortion is visible in the survey itself. Include Musk and the S&P 500 average jumps to $340.1 million ^[4], roughly 15 times the ex-Musk figure ^[2]. On the assumption the sample is 500 companies, that gap implies a single-year value for Musk of about $159 billion ^[8], which is why the honest number to negotiate against is $22.8 million and not the headline one.

The ratios follow. Excluding Musk, the average CEO-to-worker gap at S&P 500 companies reached 312 to 1, up from 285 to 1 in 2024, a move of 27 points ^[9][3]. Including Musk it is 5,387 to 1, about 17 times the ex-Musk ratio ^[10][9]. Note that $22.8 million over $69,770 is 327 to 1 ^[4], not 312, so the published ratio is not a simple division of the two headline figures and should not be quoted as one. Redmond says members "are outraged at what is happening to them and feel they need to speak out more forcefully on inequality" ^[11].

Shareholders are not the brake. Companies argue that large packages drive results and therefore shareholder value ^[12], and according to Semler Brossy, average Say on Pay approval at S&P 500 companies through the end of June was 90.6%, above the 89.4% recorded for all of last year ^[13], a rise of 1.2 points as the underlying numbers climbed 21% ^[5]. Size alone does not fail. Goldman Sachs paid CEO David Solomon $118.9 million last year including retention awards ^[7], about 5.2 times the S&P 500 average ^[7], and the plan still drew 71% approval, below average but comfortably carried ^[15]. What fails is structural novelty: Welltower's $821 million decade-long award to CEO Shankh Mitra ^[14] averages $82.1 million a year, some 3.6 times the index average ^[6], and got 19% support ^[14], more than 70 points below the S&P 500 norm ^[10].

Two things to watch. First, whether comp committees copy the structure of the Musk plan (long-dated, target-triggered, very large) or only its magnitude, because the Welltower vote suggests investors will tolerate the second more readily than a ten-year lock-up. Second, whether the 312-to-1 figure starts appearing in contract talks; the AFL-CIO is already framing it as a mobilisation number ^[11], and a 3% wage line ^[8] next to a 21% executive line ^[2] is an easy argument to make in a bargaining room.