Our latest analysis finds that CEO pay rose 14.0% at the top 350 U.S. firms in 2025 as the CEO-to-worker pay ratio hit 325-to-1.

Between 1978 and 2025, CEO pay jumped an astronomical 1,316% while typical workers’ pay only rose 28%. As a result, the CEO-to-worker pay ratio increased more than tenfold since 1978.

Figure A demonstrates the rise in the CEO-to-worker pay ratio using both the realized and granted CEO compensation measures (for more on our methods and additional analysis, see EPI’s CEO pay landing page). The pay ratio increased a modest amount between 1965 and 1978, but then exploded in the late 1990s and has remained extraordinarily high since then, ebbing some during recessions and stock market losses.

Media reports have called attention to Elon Musk’s Tesla pay package for 2025, which the company reports as $158 billion. We should note that this $158 billion is not in our measure of CEO pay—largely because it was not paid and likely never will be—and therefore cannot explain the uptick in CEO pay in 2025. The $158 billion refers to the potential pay Musk could receive only if Tesla meets a number of performance metrics related to its output and share price in coming years. Most market observers deem it highly unlikely that Tesla will meet these metrics, and a large portion of this $158 billion has already been “lost” since some of the performance metrics were required to be met in 2025 and were not. In some ways, the $158 billion expense reported by Tesla is just an accounting exercise—the amount that other shareholders’ stock would have been diluted had the performance metrics been met.

CEO pay is strongly related to the stock market, though less on stock options

The jump in CEO pay in 2025—though striking—isn’t surprising given how closely CEO pay tends to track gains in the stock market, as the S&P 500 rose a similar 11.8% in 2025.

While salaries were only about 5% of total CEO pay in 2025—which averaged $27.9 million—the vast majority of CEO pay (82%) was in the form of stock options or stock awards. However, there has been a marked shift away from stock options to stock awards over the past two decades. As Figure B shows, the share of compensation in stock options has fallen from 85% in 1992 to 26% in 2025.

This shift to stock awards has been driven by executives’ search for lower taxes as well as regulatory changes made in the early 2000s. Stock options are more likely to be considered ordinary or W-2 income rather than other stock-based pay, which is taxed at a lower rate. Further, companies used to be able to offer stock options to executives without notifying shareholders of the expense. But a regulatory change after 2006 required the full expensing of stock options in reports to shareholders, making them appear more costly to grant.

While tax incentives and these regulatory changes may have incentivized this shift away from stock options, this shift has also likely led to a slightly better alignment of CEO pay to longer-term company success. Stock options allow executives to benefit from rising stock prices, but do not penalize them for falling prices. Stock awards, conversely, expose executives to the cost of falling stock prices as well as the benefits of rising prices. While an improvement, the shift from stock options to stock awards has obviously not been a transformational win for making CEO pay more generally fair and rational.

This shift from stock options to stock awards also has implications for the measured share of corporate-sector income accruing to capital versus labor. Over a full business cycle, the labor share of income has often reflected the leverage workers have to increase their wages versus capital owners’ ability to keep revenue in the form of profits (see Figure C). For arcane tax and data reasons, income from stock options is more likely to be recorded in economic data as labor earnings than is income from other forms of stock-based pay. Therefore, some of the losses in labor’s share of income in Figure C may be in part due to the changing ways top executives are receiving their compensation rather than simply the unequal balance of power between capital and labor.

Policymakers can rein in excessive CEO pay

The rapid growth in CEO pay over the last several decades has not been driven by rising CEO productivity. Instead, it has simply been the result of executives’ ability to leverage their political and economic power to increase their own pay. As such, excessive pay can be reined in with policy changes.

Policymakers can alter tax policy to lower incentives for excessive CEO pay and change corporate governance laws to give shareholders greater ability to penalize excessive pay packages. Lawmakers can also strengthen labor standards to give workers more leverage to secure a larger share of the income generated by the firm, leaving less for CEOs (and shareholders) to claim.

Policymakers can further boost leverage for typical workers by strengthening the right to organize and form unions. For starters, Congress can pass the Protecting the Right to Organize (PRO) Act to make it easier to organize for the tens of millions of U.S. workers who want unions at their workplace. Further, policymakers can pass legislation instituting default collective bargaining when CEO-to-worker pay ratios are especially exorbitant.