CEO pay fell last year. It’s still way higher than yours.

Chief executives of the nation’s publicly traded companies saw their collective pay decline by almost 20% in 2023, new analysis shows, and even experts are stumped as to why.

Trends in CEO compensation generally mirror those of the stock market, in part because pay packages for chief executives have largely been tethered to stock performance for five decades. But a recent report by the Economic Policy Institute found that realized compensation for CEOs — including base salary, bonuses, stock awards, and stock options — fell 19.4% from 2022 to 2023, a strong period for the U.S. economy and for Wall Street.

"This is probably the first time I can remember where we saw stock market go up and [CEO] pay go down," said Josh Bivens, chief economist at the Economic Policy Institute, a left-leaning think tank. It's left researchers questioning "whether this is a blip or some promising evidence that CEO pay is getting a little more disciplined."

CEO compensation has soared 1,085% since 1978, according to the EPI’s analysis, compared with a 24% rise for the typical worker, so the idea that corporate boards have suddenly gotten more disciplined about CEO pay is “a little hard to believe,” Bivens said.

The EPI’s annual CEO compensation report evaluates the 350 largest publicly owned U.S. companies that sell stock on the open market, drawing on data from S&P’s Compustat database.

Ballooning executive pay is a major factor shaping the chasm between top earners and everybody else. Private-sector employees have experienced wage growth since the pandemic, with pay and benefits climbing more than 5% in 2022 and 4% in 2023, according to data from the Labor Department. But those gains have done nothing to close the gap between workers and chief executives, who earned 290 times as much as the average worker in 2023, according to the EPI. In 1965, it was 21 times as much.

CEO pay packages have drawn outrage from unions and worker advocates amid labor disputes involving Hollywood, the Big Three automakers, and Boeing. Although strikes yielded historic wage gains for workers in the past year, the gap in pay between the rank and file and the C-suite is as big as ever.

“The escalation of CEO compensation — and of executive compensation more generally — has likely helped fuel the wider growth of top 1% and top 0.1% incomes, contributing to widespread inequality,” the EPI’s analysis states.

The “puzzling” dip in CEO pay amid a strong stock market could have something to do with a “shift in stock-related pay away from options,” the EPI researchers said, adding that they expect “this overall divergence will likely turn around with the stock market gains so far in 2024.” The S&P 500 is up nearly 22% this year.

Fully accounting for a CEO’s compensation can be tricky because the estimated values of stock and options “granted” to executives fluctuate until they are cashed in, or “realized,” at a later time. Such positions typically come with perks that are harder to put a price tag on, such as use of corporate jets, private security, and ritzy apartments or vacation properties.

The EPI looked at “granted” compensation and “realized” compensation in the interest of getting a fuller picture. The granted measure of CEO compensation, which values stock options awarded in 2023 but not yet cashed in, fell by 14.1%.

But both figures give a similar sense of how CEO pay has exploded over decades: “granted” compensation to top CEOs rose 932% between 1978 and 2023, while “realized” compensation rose 1,085%.

“Rising CEO pay does not reflect a rising value of skills or contributions to firms’ productivity,” the EPI’s report says. “What has changed over the years is CEOs’ use of their power to set their own pay.”

Corporate governance has not served as an effective check to executive pay in recent decades, according to Dean Baker, cofounder of the Center for Economic and Policy Research.

In theory, “you should have board of directors meetings where people are asking, ‘Can we get away with paying our CEO less?’” Baker said. “But as far as I can tell, that question almost never gets asked.”

He contends that executives have been incentivized to focus on the best possible stock market performance to gain maximum personal benefit, and boards have not done enough to push back.

“The dynamics are that there’s really no check on CEO pay, it just goes up and up,” Baker said, which then “affects the pay structure throughout the economy.”

A separate report this year from Equilar, which conducts an annual survey of executive pay, concluded that median total compensation for CEOs rose 12.6% in 2023 to $16.3 million. The median S&P 500 employee earned $81,467 in 2023, according to Equilar.

Stock awards made up 70% of total CEO compensation, and their values jumped 10.7% last year to $9.4 million, “largely contributing to the overall rise in total compensation,” Equilar’s report notes.

Equilar, which uses a different method for calculating CEO pay than the Economic Policy Institute and focuses solely on executives who have served at least two years for S&P 500 companies, pegs the ratio of median CEO pay to the median worker’s at 312-1.