Salaries at Fortune 500 vary depending on the department you work in. Source:Authors analysis of data on top 0.1% wages from Mishel and Wolfe 2018 and extrapolation of Kaplans (2012b) CEO compensation series, The data in Table 3 also provide a benchmark of CEO compensation to that of the college-to-high-school wage premium. F100 CEO - 10mm total comp F100 SVP ~ 500-750 base F100 Manager ~ 200 total comp; structure being manager ->director ->VP ->SVP . Clifford (2017) describes the Lake Wobegon world of setting CEO compensation that fuels its growth: Every firm wants to believe its CEO is above average and therefore needs to be correspondingly remunerated. Forty-four percent of the growth of the top 0.1%s income share and 36% of the top 1%s income share accrued to households headed by nonfinance executives; another 23% for each group accrued to households headed by financial-sector workers (some portion of which were executives). on a scholarship before entering the business world. Trends before 1995 are based on the changes in average top-company CEO and economywide private-sector production/nonsupervisory worker compensation. It is also important to note that while there has been a shift in the composition of CEO compensation it remains the case that stock-related components (either awards or options) make up between 68 and 74% of all CEO compensation. Elon Musk, Tesla: $23.5 billion Musk, the founder and CEO of SpaceX and Tesla, "realized" compensation worth almost $23.5 billion in 2021, from exercising some Tesla stock options awarded in a. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices Instead, the CEO of a Fortune 500 company is primarily concerned with the "big picture," which the Corporate Finance Institute describes as managing the company's managers while developing and overseeing the execution of long-term strategies. A 2019 Institute for Policy Studies report estimated that 80% of S&P 500 companies pay their CEO over 100 times more than they pay their median worker, meaning it would take approximately 100 years for the average employee at one of these companies to earn what their CEO makes in a year. Several policy options could reverse the trend of excessive executive pay and broaden wage growth. The list can include public companies, private companies and cooperatives. Internal Revenue Service (IRS). Musk doesnt take a salary and didnt receive any new compensation in 2021, but he does own 16% of the electric-vehicle companyand the rocketing value of Tesla stock over the past three years, despite the markets recent slump, has wildly outpaced both the S&P500 and the automotive industry. Revenue rose 24.7% percent in 2021. For more details you can refer to our cookie policy. Companies Where CEO Earns Over 500 Times What Employees Make If CEO pay growing far faster than that of other high earners is evidence of the presence of rents, as Kaplan suggests, one would conclude that todays top executives are collecting substantial rents, meaning that if they were paid less there would be no loss of productivity or output in the economy. It allows us to avoid artificially lowering the estimated change in this years CEO compensation relative to last years and earlier years.5, Using this method, we find that average CEO compensation (based on stock options realized) was $17.18 million in 2018, down $90,000 (0.5%) from the $17.27 million average in the first half of 2017. Many people dream of working at a Fortune 500 company, but what is it actually like? While many CEOs are not as generously compensated as Nadella and Iger, they do pretty well. The 9,692 executives in publicly held firms who were in the top 0.1% of wage earners had average annual earnings of $4.4 million. This analysis finds that, contrary to Kaplans findings, the compensation of CEOs has far outpaced that of very highly paid workers, the top 0.1% of earners. All Rights Reserved. Growth: setting goals creating plans for growth for the company, in coordination with the board of directors, and then implementing those plans. Years as CEO: 9Companys annualized total return over tenure: 23.1%S&P 500 annualized total return over CEOs tenure: 13.3%3-year average compensation: $10.4 millionGas prices are soaringbut given the market performance of this gas-station operator, the CEOs realized pay is a relative bargain. The role of stock options has correspondingly declined. A spokesperson for Altice USA disputed Fortunes analysis and said by email: Mr. 2012. The financial crisis of 2008 and the accompanying stock market tumble knocked CEO compensation based on realized stock options down 43.8% from 2007 to 2009. An examination of trends in the number and value of unexercised stock options for the same sample of executives confirms that there has been a shift away from options awards rather than an accumulation of unexercised stock options being held to cash in as stock prices rise further. Our analysis evaluated the pay packages of 280 Fortune 500 CEOs, who earned a median total compensation of $15.9million, up 30% from a year earlier. Over the nearly six years of Goeis tenure, the cable providers stock has returned an annual average of 21% while the broader market has returned 13.5% annually. June 22, 2023, 10:50 AM PDT. The result was a paycheck that was $1.1 million lighter at the end of the year. After 2009, CEO compensation measured using options realized resumed an upward trajectory. Heres how Fortune crunched the numbers to determine the Most Overpaid CEOs in the 500.To conduct our analysis, we began with the full list of the CEOs on this years Fortune500. Specifically, the SECs rule grants firms significant discretion in reporting median worker pay, which makes the reported ratios incompatible across firms. It belongs . His articles have appeared in a variety of academic and nonacademic journals. This includes some essential cookies. Terms & Conditions. Elon Musk, Tesla: $23.5 billion. This section reviews competing explanations for the extraordinary rise in CEO compensation over the past several decades. But so far none of these warningsor policy proposalshave had much effect. Anheuser-Busch CEO Brendan Whitworth says . The average salary of a Fortune 500 CEO is $15.9 million per year. Thats a fraction of Zaslavs three-year average of $62.7million. Chief executive officers (CEOs) of the largest firms in the U.S. earn far more today than they did in the mid-1990s and many times what they earned in the 1960s or late 1970s. 2015-160, August 5, 2015. Powered and implemented by Interactive Data Managed Solutions. In contrast, the CEO-to-typical-worker compensation ratio (options realized) was 20-to-1 in 1965 and 58-to-1 in 1989. Factor in the other parts of the package, though, and the numbers get a lot bigger and the order of who earned the most differs wildly. Ten Percent Of Fortune 500 Companies Are Now Women-Led: The - Forbes 212 on this years Fortune500. CEO pay packages can date much of their Hulk-like growth back to 1951, when a McKinsey consultant named Arch Patton published a groundbreaking multi-industry survey on executive compensation. Fortune 500 salaries vary by department as well. Note that Table 1 provides a projection for data for 2018. . The fall from 2000 to 2007 was steeper than for the other measure, hitting 241-to-1 in 2007. They are very highly paidbut justifiably so, according to their companys stock market performance. The trends are presented inFigure C. Notes: CEO average annual compensation is measured for CEOs at the top 350 U.S. firms ranked by sales. Various years. (The comparisons end in 2017 because 2018 data for top 0.1% wages are not yet available). CEO compensation fell again during the financial crash of 20082009 and rose strongly over the recovery since 2009 but still remains below the 2000 peak levels. Revenue for the company rose 14.9% in 2021. Kaplan (2012a, 4) concludes that CEO relative pay has remained relatively constant or declined. He finds that the ratio remains above its historical average and the level in the mid-1980s(2012b, 14). The full list is below. How Much Money Do Oil Refinery Workers Make? National Income and Product Accounts (NIPA) Tables[online data tables]. Federal Reserve Economic Data (FRED)[database]. One key example of such a fundamental change would be to provide worker representation on corporate boards.. Average CEO compensation attained its peak in 2000, at the height of the late 1990s tech stock bubble, at $21.5 million (in 2018 dollars) based on either measure368 or 386 times the pay of the typical worker, depending upon the measure used.2 CEO compensation fell in the early 2000s after the stock market bubble burst, but mostly recovered by 2007, at least for the measure using exercised stock options (the measure using options granted remained substantially below the 2000 level). who to sue, Flynn said. Bivens, Josh, Elise Gould, Lawrence Mishel, and Heidi Shierholz. Mattel had the highest ratio of 4,977 to 1. The average Fortune 500 salary varies by location. Bakija, Jon, Adam Cole, and Bradley Heim. One can gauge the bias of including executive wages in the denominator by noting that the ratio of executive wages to all top 0.1% wages in 2007 was 2.14 but the ratio of executive wages to nonexecutive wages was 2.32. Washington, D.C.: WorldatWork Press. We also look at the relationship between CEO pay and the stock market. Darden Restaurants, the parent company behind Olive Garden and LongHorn Steakhouse, cut its CEOs $1 million base salary to zero in early April, for instance; but on June 1, the company restored that salary while also ending other executives 50% pay cuts. Income growth has remained unbalanced. Fannie Mae Board of Directors Compensation and Executive Salaries, Facebook Board of Directors Salary and Compensation [Including Base Salary and Stock Awards], Walmart Board of Directors Salary Compensation, and Salaries, Levi Strauss Board of Directors Compensation and Salary, XPO Logistics CEO Brad Jacobs Email Address, Salary, Net Worth and Education, Lockheed Martin CEO James Taiclet Email Address, Salary, Net Worth and Education, Cummins CEO N. Thomas Linebarger Email Address, Salary, Net Worth and Education, Total Compensation: $30,019,840 (US$30.01 million), Total Compensation: $25,600,312 (US$25.60 million), Total Compensation: US$24,179,166 (US$24.17 million), Total Compensation: US$23,392,187 (US$23.392 million), Total Compensation: $22,527,249 (US$22.52 million), Total Compensation: $22,434,351 (US$22.43 million), Total Compensation: $21,939,098 (US$21.93 million), Total Compensation: $21,870,450 (US$21.87 million), Total Compensation: $19,411,071 (US$19.41 million), Total Compensation: $19.2 million (US$19.2 million), Total Compensation: $19,278,335 (US$19.27 million) (Fiscal Year Ended 2018 Salary), Total Compensation: $18,637,867 (US$18.63 million), Total Compensation: $18,107,356 (US$18.10 million), Total Compensation: $17,752,835 (US$17.75 million), Total Compensation: $17,400,207 (US$17.40 million), Total Compensation: $17,405,377 (US$17.40 million), Total Compensation: $16,581,163 (US$16.58 million), Total Compensation: $15,800,290 (US$15.80 million), Total Compensation: $15,682,219 (US$15.68 million), Total Compensation: $15,571,004 (US$15.57 million), Total Compensation: $11,701,917 (US$11.70 million), Total Compensation: $11,514,115 (US$11.51 million), Total Compensation: US$11,366,662 (US$11.36 million), Total Compensation: $8,000,000 approx. What this report finds: The increased focus on growing inequality has led to an increased focus on CEO pay. Projected value for 2018 is based on the percent change in CEO pay in the samples available in June 2017 and in June 2018 (labeled first-half [FH] data) applied to the full-year 2017 value. 87 on this years list. Highly paid, or overpaid? The data have now been corrected by ExecuComp. According to Fortunes calculations, Goei has been paid an average of $16.1million in total compensation over the past three years. In 2019, the top 10 best-paying sectors for CEOs were: This can vary. Yet, the new high still only translates to around 15 percent female representation at the top of the country's biggest public businesses. Its a danger to democracy, and its a danger to capitalism.. Greenbrier stock jump 31% after quarterly report - Portland Business In an emailed statement, a spokesperson reiterated that Activision Blizzard had valued Koticks granted (but not realized) compensation in 2021 at $826,549. Fortune 500; Home Page. It shows the average compensation of CEOs at the 350 largest publicly owned U.S. firms (i.e., firms that sell stock on the open market) based on two different ways to incorporate stock options into compensation. She is very enthusiastic about this work and topic. 6213, October 1997. Representation for women in board rooms still significantly lags men, making up just 10.4% of Fortune 500 companies, according to Fortune. Revenue surged 61.4%. CEO salaries rose to record highs in 2021 | Fortune The list includes only companies that are incorporated in the U.S., that operate in the U.S. and that report their finances to the federal government or a state government. The data presented on this page does not represent the view of Fortune 500 and its employees or that of Zippia. It is useful, in this context, to note that wage growth for the bottom 90% would have been nearly twice as fast over the 19792017 period had wage inequality not grown.16 Most of the rise of inequality took the form of redistributing wages from the bottom 90% (whose share of wages fell from 69.8% to 60.9%) to the top 1.0% (whose wage share nearly doubled, rising from 7.3% to 13.4%). Moreover, as we discuss, the appropriate comparison is to other earners, not to households, which could have multiple earners and shifts in the number of earners over time. By 2014 the stock market had recouped all of the value it had lost following the financial crisis, and the CEO-to-worker compensation ratio in 2014 had recovered to 296-to-1. The highest paid CEOs in America in 2021 | Fortune Amazon, which promoted Jassy from within, argues that its trying to keep up in the CEO-comp arms race: What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon board of directors, a spokesperson said by email. Typical worker compensation is the average annual compensation of the workers in the key industry of the firms in the sample. (All declined or did not respond to requests for comment.). Other top income groups, not subject to managerial power forces, have seen similar growth in pay. August 18, 2022 Copied Gift this article Even in the moneyed world of high finance, advisers warned, Jimmy Levin's pay deal was an exceedingly rich one. Fortune 500 pays the second highest average salary in Billerica, MA, at $63,241 per year. The average big-company CEO made 351 times the pay of the average worker on a realized basis in 2020, according to theEconomic Policy Institute (EPI), which has tracked the metric for decades, up from a 21-to-1 ratio back in 1965. Fourth, our series is able to extend back to 1965, allowing us to analyze trends in executive compensation over time. While responsibilities vary from one company to another, a CEO is usually tasked with things such as: In 2018, Minnesota Congressman Keith Ellison (D) released a report on 225 of the Fortune 500 companies' CEOs. The employee data is based on information from people who have self-reported their past or current employments at Fortune 500. This February, two months before the merger closed, CNN boss Jeff Zuckera close friend of Zaslavsabruptly resigned over an undisclosed romantic relationship with a subordinate. Mishel, Lawrence, Josh Bivens, Elise Gould, and Heidi Shierholz. 7. Benioff founded Salesforce in 1999, adopting the marketing slogan The End of Software. The cloud-based customer relationship management platform ranked 136 on this years Fortune 500. Even Patton eventually came to think he had created a monster: In the mid-1980s, he reportedly said he felt guilty for contributing to skyrocketing executive pay, according to his New York Times obituary. CEO pay has historically been closely associated with the health of the stock market, although this connection loosened over the last few years when CEO compensation did not correspond to rapid stock price growth. Finally, we use consistent data and methodology to construct our ratios; our ratios are thus comparable across firms and from year to year. 1 because Altices stock has underperformed so dramatically. This follows from the fact that over 19792017 annual earnings rose by 22.2% for the bottom 90%, while the average growth across all earners was 40.1% (Mishel and Wolfe 2018). This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. (Kaplan 2012a, 4). Kopczuk, Wojciech, Emmanuel Saez, and Jae Song. Netflix ranked 115 on the Fortune 500, with an 18.8% change in revenue. Among the five passengers dead was CEO of the company who led the expedition, Stockton Rush. Ratios prior to 1992 are constructed as described in the CEO pay seriesmethodology(Sabadish and Mishel 2013). In 2018, the median total compensation for S&P 500 CEOs rose 4% to $12.3 million, according to the . Fortune 500 | World's top 10 highest paid CEOs in 2021 - Moneycontrol Linda Yaccarino is trying to fix Twitter's accounting - Fortune As Fortune reported, for that year, Mark Costa, CEO of Eastman Chemical, saw his pay decrease by 11 percent between 2018 and 2019 to $14 million. This month, for the first time in the Fortune 500 list's 68-year history, more than 10% of Fortune 500 companies are led by women. At 188 of the 225 . Raising Americas Pay: Why Its Our Central Economic Policy Challenge. Our examination of CEO compensation continues to provide crucial data points for evaluating current CEO compensation trends as well as trends in CEO compensation over time. Some CEOs would have earned more than her, but just like sport stars, first-year CEOs usually get hefty signing bonuses. After Musk, the 10 most highly compensated Fortune 500 CEOs of 2021 are all tech and biotech CEOs, including the heads of Apple, Netflix, and Microsoft. Policy choices have tilted the playing field toward the rich and corporations. Consumer defense, for example surged by nearly 10 percent between 2018 and 2019. The stock market decline during the 2008 financial crisis also sent CEO compensation tumbling, as it had in the early 2000s. 12. 2013. CEO compensation has grown 940% since 1978 - Economic Policy Institute (Stock options make up a big part of CEO pay packages, and the conservative measure values the options when granted, versus when cashed in, or "realized.") S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Compustat. Because stock-options-realized compensation tends to fluctuate with the stock market (as people tend to cash in their stock options when it is most advantageous to do so), we also look at another measure of CEO compensation, to get a more complete picture of trends in CEO compensation. They found that across all Fortune 500 companies, the average CEO pay was $13.8 million a year, while the average median worker pay was about $77,800 and the average ratio of CEO pay to median . Both the simple ratios and the log ratios understate the relative pay of CEOs, because CEO pay is a nontrivial share of the denominator, a bias that has probably grown over time as CEO relative pay has grown. (All stock market data used in our rankings is through April29, 2022, and doesnt reflect Mays further plummetor, in Teslas case, the ongoing fallout from Musks chaotic efforts to buy Twitter. Board of Directors Low wages at the company have contributed to workers at factories across the country voting to unionize. Economic Policy Institute, August 2018. VitalChek employees earn the highest salaries, with an average yearly salary of $93,303. Privacy Policy Contact Us. The pattern using the CEO compensation measure that values stock options as they are granted is similar. Job and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data. Department of Economics Working Paper 2010-24, Williams College, November 2010. Years as CEO: 5Companys annualized total return over tenure: 38.6%S&P 500 annualized total return over CEOs tenure: 14.1%3-year average compensation: $11.6 millionHe led the broker-dealer at its Fortune 500 debut last year; this year, its No. Brendan Foley has been promoted to CEO of McCormick & Co. Inc. McCormick & Co. Inc. Foley's first analyst call as heir apparent came on a day when the Hunt Valley spice manufacturer (NYSE: MKC . 2. Performance Composite Score*: 10003-year average compensation: $16.1 millionCompany 3-year total return annualized: 26.8%Industry median 3-year total return annualized: 1.5%Goei isnt the highest paid CEO on our list. Performance Composite Score*: 9383-year average compensation: $13.4 millionCompany 3-year total return annualized: 3.3%Industry median 3-year total return annualized: 15.1%Following the disastrous launch of Biogens controversial Alzheimers treatment, Aduhelm, the biotech announced that the CEO will be stepping down once his replacement is named. Meta tops list of U.S. firms spending on private jets | Fortune Email communication on July 10, 2019. Activisions justification for that payout? Cook has been CEO of Apple Inc. since 2011. The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes. Economic Policy Institute Working Paper no. Over Zaslavs decade-plus as CEO, his companys shares have handily underperformed the S&P500providing an annualized return of 5.8% vs. 9.4% for the broader market. Offers may be subject to change without notice. This industry includes food companies like McDonalds and clothing companies like Gap and Kohls, according to Ellison's report. 2019. A separate report in The New York Times, though, folds in salary, stock grants, bonuses and other benefits through last Friday and finds significantly higher overall pay packages. CEO compensation relative to the wages of the top 0.1%of wage earners in 2017 far exceeded the ratio of 2.63 in 1989, a rise (2.77) equal to the pay of almost three very-high-wage earners.13 The log ratio of CEO relative pay grew 72 log points with respect to wage earners in the top 0.1%. 2012. The composition of CEO compensation has been shifting toward stock awards and away from stock options since the end of the last cycle in 20062007. Other groups with similar backgroundsprivate company executives, corporate lawyers, hedge fund investors, private equity investors and othershave seen significant pay increases where there is a competitive market for talent and managerial power problems are absent. Oracle did not respond to a request for comment. The authors thank theStephen Silberstein Foundationfor its generous support of this research. But he ranks No. Blackstone CEO Stephen Schwarzman tops the list with a $253 million pay package last year. from one year to another. Company pay ratio data is important. Pay vs. Totals are computed using unrounded numbers. A published author and professional speaker, David Weedmark has been a hiring manager and recruiter for several companies and advises small businesses on technology. 2010. Pay vs. We reported that compensation using options realized grew 17.5% over 20162017, far more than the corrected data showa rise of 5.2%. Prior to joining EPI, Wolfe worked at the Bureau of Labor Statistics as the retail and manufacturing employment analyst for the Current Employment Statistics program. Apples Tim Cook earned $770.5million in 2021 alone, mostly as a part of a 10-year grant of shares worth $1.7billion. The company said in early May that Kotick has delivered tens of billions of dollars of value to shareholders. In an emailed statement, a spokesperson noted that Kotick had reduced his salary to $62,500 in 2021 and praised his 31-year tenure for making Activision one of the most successful global gaming companies in the world.. BY Orianna Rosa Royle. The industry with the highest average ratio of CEO to worker pay was the consumer discretionary industry with a ratio of 977:1. Robinson, per Fortune.Bozeman previously worked for Ford Motor as vice president of its customer . Since 1979, and particularly since 1989, the increase in the logged CEO pay premium relative to other high-wage earners far exceeded the rise in the college-to-high-school wage premium, which is widely and appropriately considered to have had substantial growth: The logged college wage premium grew from 0.46 in 1989 to 0.60 in 2017, a far smaller rise than the logged ratio of CEO-to-top-0.1% earnings, a rise from 0.97 to 1.69. In a follow-up paper for the Cato Institute, published as a National Bureau of Economic Research working paper, Kaplan expands this point: The point of these comparisons is to confirm that while public company CEOs earn a great deal, they are not unique. Black CEOs Reach Another Record High On Fortune 500 List However, there is churn among the smaller firms in the sample. When calculating a CEOs total realized pay, we measured the following for the companys most recent fiscal year: salary and bonuses; other compensation such as vested restricted stock grants, long-term incentive payouts and perks; and stock gains in the form of value realized from exercising stock options. The starting pay at Fortune 500 is $28,000 per year, or $13.46 per hour. Associated Press CEO Pay Study: Record Year for S&P 500 Leads - Equilar A spokesperson acknowledged that during the latest fiscal year, Huang realized about $507 million from expiring options that had been granted in 2011 and 2012, reflecting the approximately 60x increase in the companys share price over the [past] decade.. These are the 10 most overpaid CEOs in the 2022 Fortune 500 - Yahoo Finance These trends confirm that there has been a reduction in stock options granted in recent years and not just an accumulating inventory of unexercised options. Think of what the workers do at the bottom of the pile. Then we screened for CEOs who had been in the job for at least three years. We also lack information on the number and wages of executives in privately held firms; to the extent that their CEO compensation exceeds that of publicly traded firms, their inclusion would indicate an even larger bias. 2013b. Many of Nadellas peers likely believe he deserves a huge payday. At Discovery, Zaslavs pay is nearly 3,000 times the median salary at the company, which the company reported was $82,964 in 2021. Microsoft posted a robust 38% increase in profits last yearearning $61 billion, the fourth-largest sum among Fortune 500 companiesas revenue rose 17.5% to $168 billion thanks to a successful Surface laptop and tablet launch. Never miss a story: Follow your favorite topics and authors to get a personalized email with the journalism that matters most to you. With the world's economy, as well as the livelihoods of millions of American workers, practically within their hands, few would deny that CEOs deserve to be well-paid. The Internal Revenue Service Statistics of Income (SOI) Bulletin reports that there were nearly 15,000 corporate tax returns in 2007 of firms with assets exceeding $250 million, indicating that there are many more executives of large firms than just those in publicly held firms (IRS 2018). CEOs get retirement benefits you don't - CNN Business In Current Employment Statistics [public data series]. While millions of Americans struggled to make ends meet in 2020, Americas top CEOs compensation packages were as generous as everand, in some cases, historically grandiose. Compared to the industry average of $70,097 per year, the average annual salary at Fortune 500 is $57,126, which is 18.50% lower. The top graph in Figure B shows that exercised stock options (options realized) made up roughly half of CEO compensation in 2006 and 2007 but have fallen to 31% in 2018.