CEO pay, including stock awards and options, is up 11.1% since 2020 and 1,460% since 1978, a new EPI analysis finds. This increase was not matched by increased pay for typical workers: The ratio of CEO-to-typical-worker pay soared to 399-to-1 under EPI’s realized measure of CEO pay, the highest ratio on record, up from 366-to-1 in 2020 and a massive increase from 59-to-1 in 1989. 

The CEO pay analysis this year excluded an extreme outlier in 2021: Elon Musk, CEO of Tesla Motors. In 2021, Musk exercised $23.5 billion worth of stock options that would have expired in 2022, making his pay under EPI’s realized measure nearly 1,000 times the average of other large-company CEOs. Including Musk’s pay in the analysis would have led to an increase in CEO pay of over 300% relative to 2020.  

Skyrocketing CEO pay is not just a symbolic issue—it’s become a substantive driver of rising inequality. It adds fuel to the growth of top 1% and top 0.1% incomes, limiting opportunities for economic growth for ordinary workers and widening the gap between the wealthiest Americans and everyone else.   

“Exorbitant CEO pay is a contributor to rising inequality that we could restrain without doing any damage to the wider economy. We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so,” explains Josh Bivens, EPI’s director of research and one of the authors of the report.  

CEO pay is growing ever higher because the labor market for top corporate executives is fundamentally broken. CEOs have essentially seized the power to set their own pay by convincing corporate boards to act as CEOs’ agents instead of their bosses. Further, by hooking their pay to general growth in the stock market—more than 80% of their pay is stock-related—CEOs have been able to realize huge raises that are not the result of them becoming more productive or skilled over time.  

The decision to exclude Musk’s pay was made for similar reasons as EPI’s decision to exclude Mark Zuckerberg’s salary after the initial public offering for Facebook in our 2013 analysis. Outliers like these are further proof that CEO pay is not linked to job performance.  

“Musk’s compensation in 2021 is different in degree, not kind, from other CEOs’ pay: It rewards him for increases in the value of stock that may well have occurred under any other Tesla CEO. It has no clear link to the actual economic value he brings to the shareholders–let alone workers–of his company over the long term,” said Jori Kandra, co-author of the report.  

The authors outline several policy solutions that would limit CEOs’ ability to attain increasingly higher pay without hurting the overall economy. These include:  

• Implementing higher marginal income tax rates at the very top of the income ladder to limit executives’ ability to add to their wealth without increased productivity and reduce the incentives for executives to push for such high pay. 
• Using antitrust enforcement and regulation to restrain firms’—and by extension, CEOs’—excessive market power.  
• Allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.