Michigan’s top-paid executives are seeing shrinking paychecks as companies embrace performance-based pay and shareholder demands for accountability.

Michigan’s corporate titans—particularly in the auto and manufacturing sectors—have paid their top executives huge compensation packages for decades. But in 2024, for the first time in more than a decade, no state CEO took home a $100 million check. The change represents a sharp break from previous trends, as firms adapt to economic stress, evolving shareholder attitudes, and increasing public scrutiny.

So why is Michigan’s declining mega CEO compensation happening? Let’s take a closer look at some of the details about what’s reshaping executive pay in the state.

Shareholder Pushback and Greater Accountability

One of the biggest forces behind the smaller goliath-sized CEO paychecks is increasing shareholder pushback. Shareholders are asking for executive pay tied to company performance rather than regardless of whether a company thrives or struggles.

For example, in 2024, investors at one of the largest Michigan-based automakers rejected a proposed $30 million executive pay package for its CEO after stock prices dropped in three consecutive quarters. One of the leading Detroit-based technology companies suffered investor anger when its CEO’s compensation increased in spite of slow revenue growth.

These cases reflect a larger trend: investors will no longer abide by sky-high executive compensation unless it is a direct payoff to shareholders and company performance.

Economic Uncertainty and Market Volatility

Like the rest of the country, Michigan has been going through economic turmoil in the guise of inflation, supply chain disruption, and volatile interest rates. These pressures have forced companies to re-prioritize matters of money, including executive compensation as one of them.

In 2023, Michigan CEO compensation rose at a slower rate than in previous years, mirroring a national trend where stock-based incentives now account for a larger share of total compensation. This shift ensures CEOs are rewarded only when their companies perform well in the long term.

A Shift Toward Performance-Based Pay

One of the most dramatic changes in Michigan’s business landscape is the move away from fixed compensation toward performance pay. Instead of writing large guaranteed checks, CEOs have more and more of their compensation linked to stock performance, corporate profitability, and strategic goals over time.

For instance, the highest-paid CEO in Michigan in 2024 earned around $85 million—far short of the $100+ million contracts of previous years. Automotive and manufacturing firms, traditionally two of the state’s highest-paying employers, have revamped their pay programs to emphasize performance-based incentives.

Changing Corporate Governance Practices

Institutional investors and regulatory bodies have also played a role in reengineering CEO compensation arrangements. Boards of companies are pressured into justifying why their highest-paid executives should receive top dollars, so they implement policies that make it harder for CEOs to receive astronomical compensation without demonstrating good financial performance.

For example, Michigan-based Fortune 500 companies are increasingly implementing “clawback” provisions—policies under which firms can reclaim bonuses or stock awards if executives fail to meet performance targets or engage in financial misconduct.

Public and Political Pressure on Executive Pay

Along with shareholder activism, political and social forces are beginning to influence executive compensation trends. The disparity in pay for CEOs and for workers has been a contentious topic, particularly in the manufacturing-based economy of Michigan, where unionized workers have long fought for fairer wages.

State lawmakers over the past few years have made laws regarding policies on how to address income disparity, such as taxing companies with large gaps between CEO compensation and median workers. No sweeping legislation has been enacted, but these discussions reflect a shift toward reducing excessive executive compensation.

The Future of CEO Pay in Michigan

And Michigan CEO compensation in the future? Sure, high flyers will continue to draw fat checks, but the good old days of $100 million salaries may be over—at least in the near term.

Companies are more and more putting in place pay systems that prioritize long-term performance, shareholder trust, and corporate responsibility. Shareholders need to keep pushing CEO pay to tie back to company success, not disburse as some kind of privileged windfall.

As Michigan’s economy keeps evolving as well, the shift toward sustainable and defensible CEO pay arrangements isn’t a temporary solution—it might be the new standard.

Michigan’s corporate giants are adapting to a business era where excessive chief executive compensation is harder to justify. As investors, regulators, and the public scrutinize chief executive officers more closely as well, CEOs must show their worth more than ever.