The Musk Effect! S&P 500 CEOs’ Average Pay Soars to $22.8 Million, Hitting Record High

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) released its annual 'Executive Paywatch' report on Thursday (13th), revealing that the average compensation for CEOs of S&P 500 component companies in 2025 rose 21% to $22.8 million after excluding Elon Musk, marking the highest level since the organization began tracking data in the 1990s.

The report shows that if Tesla's 2025 restricted stock plan for Musk were included, the average CEO pay would skyrocket to $340.1 million.

Labor groups argue that Musk's 'up to $1 trillion' performance-based compensation package at Tesla has become a benchmark for other corporate boards.

Fred Redmond, Secretary-Treasurer of AFL-CIO, stated that Musk's pay has 'changed the game for other executive compensation plans—boards now use it as a reference point.' Combined with AI-driven suppression of frontline wage growth and the Republican-led National Labor Relations Board's (NLRB) hostility toward union organizing efforts, the pay ratio between S&P 500 CEOs and employees (excluding Musk) widened from 285:1 in 2024 to 312:1 in 2025. When including Musk, the average ratio reaches a staggering 5,387:1.

According to U.S. Department of Labor data, the national average annual wage for workers in May 2025 was $69,770, up only 3% from 2024.

Exceptionally large bonuses are triggering shareholder backlash. Goldman Sachs awarded its CEO David Solomon a $118.9 million compensation package including a retention bonus, yet received only 71% support in the 'say-on-pay' advisory vote. Welltower proposed an $821 million package for CEO Shankh Mitra, bundling most of his compensation for the next decade, which garnered merely 19% support.

However, SemlerBrossy statistics show that as of late June, the average 'say-on-pay' support rate among S&P 500 companies was 90.6%, higher than the full-year 2025 average of 89.4%, indicating that major asset managers continue to endorse long-term equity incentives tied to shareholder value.

Analysts note that the 'Musk Effect' is normalizing ultra-large equity awards, but one-time special bonuses, detached from regular annual structures, are becoming flashpoints in corporate governance debates. Against the backdrop of union membership rising to a 16-year high, the tension between astronomical CEO pay and everyday burdens like housing and healthcare costs is expected to persist into next year’s board election cycle.