Average compensation for chief executives at S&P 500 companies climbed to a record $22.8 million in 2025, according to new data from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). The increase reflects a growing use of large, performance-linked compensation packages that labour leaders say have been influenced by increasingly ambitious executive pay structures.
According to the AFL-CIO's latest Paywatch study, average CEO compensation rose 21% year-on-year, reaching its highest level since the federation began tracking executive pay in the 1990s.
The figures exclude compensation awarded to Elon Musk, whose pay arrangements at Tesla and wealth linked to SpaceX have become outliers even by corporate America standards.
Record payouts reshape executive compensation landscape
The AFL-CIO said a growing number of boards are approving compensation structures that mirror the scale and long-term performance orientation of Musk's pay arrangements.
Labour officials told Reuters that large stock-based incentive plans are becoming more common as companies seek to reward executives for delivering long-term shareholder returns.
According to the study:
- Average S&P 500 CEO compensation increased 21% to $22.8 million in 2025.
- The figure represents the highest level recorded by AFL-CIO Paywatch.
- When Musk's compensation is included, average CEO pay rises to $340.1 million.
- Tesla shareholders approved a restricted stock plan in 2025 that the company valued at $158 billion.
Fred Redmond, Secretary-Treasurer of the AFL-CIO, told Reuters that Musk's compensation has changed expectations around executive rewards.
According to Redmond, boards increasingly reference such structures when evaluating compensation for their own chief executives.
Gap between CEOs and workers widens further
The increase in executive compensation has reignited debate around income inequality and wage growth.
The AFL-CIO study found that the average ratio between CEO pay and worker pay reached 312:1 in 2025, compared with 285:1 in 2024, excluding Musk's compensation.
When Tesla's compensation package is included, the ratio rises dramatically to 5,387:1.
The findings come as broader wage growth remains comparatively modest.
According to data from the US Labor Department, mean annual wages for American workers stood at $69,770 as of May 2025, representing a 3% increase from the previous year.
Key workforce figures include:
- Average CEO compensation: $22.8 million
- Average worker wage: $69,770
- CEO-to-worker pay ratio: 312:1
- Previous year's ratio: 285:1
- Ratio including Tesla compensation: 5,387:1
Labour leaders cited growing concerns among workers about affordability pressures, including housing, healthcare and everyday living costs.
Investors continue to support most pay proposals
Despite criticism from labour groups, shareholder support for executive compensation remains strong.
Board compensation committees frequently maintain that executive rewards are tied to performance outcomes and shareholder value creation. Many companies also structure payouts around long-term financial and operational targets.
According to compensation consultancy Semler Brossy, average support for advisory "say on pay" resolutions at S&P 500 companies reached 90.6% through late June 2026, up from 89.4% during 2025.
The data suggests most investors continue to back executive compensation frameworks, even as public scrutiny intensifies.
Special awards attract closer scrutiny
While annual compensation programmes generally receive broad shareholder support, large one-time awards have generated more mixed reactions.
Semler Brossy identified special compensation awards as a particularly contentious issue during the latest proxy season.
Among notable examples:
- Goldman Sachs awarded CEO David Solomon compensation worth $118.9 million, including a significant retention award.
- Shareholders approved the package with 71% support, below the broader S&P 500 average.
- Real estate investment trust Welltower awarded CEO Shankh Mitra a package valued at $821 million, intended to cover much of his compensation over the coming decade.
- Only 19% of shareholder votes supported Welltower's proposal.
Welltower stated that the compensation remains contingent on performance targets being achieved over time.
The contrasting shareholder responses illustrate growing scrutiny of exceptional pay packages, even as support for conventional executive compensation remains robust.
Executive pay remains a boardroom and workforce issue
The latest AFL-CIO findings point to a continuing shift in executive compensation practices, with larger equity awards and long-term incentive plans becoming more prevalent across corporate America.
As companies compete for leadership talent and seek to align executive rewards with shareholder returns, boards are increasingly willing to approve larger compensation packages. At the same time, widening pay gaps and slower wage growth for workers are likely to keep executive compensation under scrutiny from labour groups, policymakers and investors alike.