Elon Musk’s pay package of up to $1 trillion highlights the continued escalation in CEO compensation, even as worker pay slows and rewards to shareholders remain mixed, according to several studies.
Already, Musk is the richest person on the planet with a net worth that tops $660 billion, according to Bloomberg. Musk saw his 2018 Tesla pay package — now valued at over $130 billion — reinstated in December, and his company SpaceX looks set to for a potential public offering in 2026. Those two events could well put Musk on his way to becoming the world’s first trillionaire this year. In addition, his new pay package, valued at up to $1 trillion, could also start paying out over the next decade.
While Musk may be an outlier, his stock-fueled gains highlight the booming compensation and wealth gains of CEOs in recent decades that has been driven by rising stock markets and a broader adoption of stock-centric pay packages
Over the past 50 years, top CEO compensation has climbed 1,094%, according to the Economic Policy Institute. That compares to a 26% increase in typical worker compensation.
Median total compensation for S&P 500 CEO’s was $17.1 million in 2024, up nearly 10% from 2023, according to Equilar, a corporate analytics firm. CEOs now make 192 times more than the average employee, up from a 186 to 1 ratio in 2023.
Tesla CEO Elon Musk attends the Saudi-U.S. Investment Forum, in Riyadh, Saudi Arabia, May 13, 2025.
Hamad I Mohammed | Reuters
Driving the acceleration in CEO pay is a shift in the types of stock awards used to incentivize and reward corporate chiefs.
CEO compensation typically includes four categories: salaries, long-term incentives, short-term incentives and perks. Long-term and short-term incentives are largely stock awards, and make up far and away the largest portion of CEO compensation. Stock awards accounted for 72% of CEO pay packages in 2024, with the median value increasing 15% that year, according to Equilar.
Musk’s trillion-dollar pay package, for instance, doesn’t include any salary. The potential value of the $1 trillion would come entirely from stock awards pegged to various targets. For Musk to get the full payout, Tesla must hit key milestones, including certain market capitalization and operational achievements. He could still earn billions in stock even if Tesla doesn’t meet all the targets.
“Milestone achievements built into CEO pay packages could be the norm in the future,” said Amit Batish, senior director marketing at Equilar.
Company boards and CEOs themselves say that because their pay is tied closely to stock performance, their compensation reflects the larger wealth created for shareholders. The CEO only does well if shareholders do well, they argue. If stocks plummet, CEO’s can also see big pay drops.
Others others argue that CEO’s have only a partial impact on their companies’ share price. A 2021 MSCI study of top executive pay between 2006 and 2020 found a weak correlation between higher CEO pay and company performance.
“This notion that the guy in the corner office is somehow almost single handedly responsible for company value, and everyone else is just little minions who don’t contribute much of anything … everyone can see that is not true,” said Sarah Anderson, at the Institute for Policy Studies.
Tesla’s Optimus robots walk on the day of an unveiling event in Los Angeles, California, U.S. October 10, 2024, in this still image taken from a video.
Tesla | Via Reuters
According to the 2021 MSCI study, average performing CEO’s took home only 4% less in realized pay than top-performing CEOs. More importantly, CEO’s with the lowest awarded pay saw the strongest returns for shareholders.
“When we measured pay and performance against CEO tenure, we found little evidence that high CEO pay achieved this lofty goal of CEO incentivization,” according to MSCI, an investment research firm.
Since the 1990s, company boards have shifted away from stock options, which incentivize short-term performance, with stock awards, which boards argue are driven by longer-term incentives. Shareholders of publicly traded companies can now vote in an advisory capacity on CEO pay, known as “say on pay” votes, but company boards have final say when it comes to compensation packages.
While restraining CEO pay has proven ineffective, given the natural “ratcheting up” of median CEO pay by board compensation committees, some economists advocate more stock awards for employees to help close the gap between employees and CEOs.
Employee Stock Ownership Plans, or ESOPs, for instance, are qualified retirement plans that give employees shares in the company through a trust. Employees who can partake in ESOPs tend to end up with better financial security, said Loren Rodgers, executive director of the National Center for Employee Ownership. That in turn benefits their companies, he said.
“Employee-owned businesses are more productive,” Rodgers said. “They’re more able to recruit people. People quit at lower rates. They’re more competitive.”
Watch the video above to hear more about the uptick in CEO pay and what is driving these massive pay outs.
