According to a new AFL-CIO Executive Paywatch analysis based on 2024 SEC filings, Starbucks CEO Brian Niccol earned about $98 million, making him the highest-paid CEO among the 500 largest U.S. public companies—6,666 times more than the company's average worker, who earned under $15,000.
Niccol's compensation discrepancy is an extreme example, but it reflects a larger reality. In 2024, the average S&P 500 CEO earned $18.9 million , or 285 times the median worker's $49,500 income, up from 268:1 in 2023. Other top earners include Disney's Bob Iger and the CEOs of Axon, Netflix, Apple, and JPMorgan, all of whom typically receive eight- or nine-figure salaries.
Executive compensation is often based on measurable outcomes such as stock price performance, total shareholder return, or EPS growth. CEOs such as Niccol are given significant long-term equity rewards that are intended to link their incentives with shareholder profit; nevertheless, opponents frequently point out that these packages frequently reward accomplishment that falls short of or is unrelated from median worker contributions.
Corporations believe that attracting top-tier leadership in highly competitive global businesses necessitates high compensation. Retaining CEOs capable of leading multinational consumer and technology corporations leads boards to pay significant awards, thanks in part to peer benchmarking inside elite salary clusters.
Compensation committees do not usually operate independently of management. According to News.com,compensation experts assist CEOs increase their pay by pursuing higher percentile targets. Meanwhile, CEOs can wield power over boards, weakening internal controls and strengthening a high-compensation environment.
Part of the stark ratio in Niccol's situation arises from Starbucks' workforce composition: the vast majority are part-time employees, many of whom are students or work as baristas on the side. Additionally, Starbucks provides a variety of benefits to even part-time employees.
While huge compensation packages have long been the subject of public scrutiny, corporations say that competitive CEO pay reflects the high-stakes obligations put on their top executives—responsibilities that have a direct impact on shareholder returns, brand strength, and long-term employee performance. Brian Niccol's selection as CEO of Starbucks, for example, came after a successful tenure at Chipotle, where he helped manage the brand's rebound from a series of food safety disasters, rebuilding public trust while increasing profitability. That track record of transformation made him a strategic hire for Starbucks, which was looking to expand globally and modernize operations in a competitive retail environment.
Proponents of performance-based compensation argue that effective leadership can generate a "trickle-down" effect, resulting in higher stock valuations, job stability, stronger 401(k) plans, and investments in employee training and store infrastructure. Niccol's "Back to Starbucks" plan , for example, promises $500 million in investments in labor and store hours, as well as ambitious upgrades to 1,000 stores by 2026, including service advancements and menu innovation.
It's worth mentioning that even huge organizations with large CEO-to-worker pay disparities continue to invest heavily in staff development and societal impact. At Apple, for example, CEO Tim Cook, who outearns employees 1447:1 and succeeded the legendary Steve Jobs, has overseen significant expansions in workforce education and sustainability programs, whereas Jamie Dimon of JPMorgan Chase has championed workforce reentry initiatives and small business lending programs in underserved communities. Meanwhile, Walmart, which is frequently criticized for its CEO pay discrepancy, has raised its average hourly compensation to more than $17 and introduced debt-free college tuition programs for employees. These projects demonstrate how executive leadership can contribute to larger initiatives that benefit employees, especially when corporations are open about long-term investments in human capital and community participation.
The ultimate measure of success—financial performance, employee influence, and long-term growth—may only become apparent with time. However, in the context of compensation arguments, there is still room to see pay as one of many inputs in corporate governance and value generation.
It is critical for taxpayers to understand how CEO compensation influences company decisions, as well as how those decisions affect jobs, benefits, and economic policy. Contact our office if you require assistance with your own tax preparation concerns.