Even by the standards of a high-powered Fortune 500 media mogul, David Zaslav has generated an inordinate number of headlines over the past year or so. And most of them involved giant gobs of money.
In May 2021, Zaslav’s Discovery Inc. agreed to buy AT&T’s WarnerMedia unit, the Hollywood studio heavyweight that also owns HBO and CNN. The megamerger was valued at $43 billion, and it saddled the newly formed Warner Bros. Discovery, the company Zaslav runs today as CEO, with a gargantuan total of $55 billion in debt.
A limited series’ worth of drama ensued. This February, two months before the merger closed, CNN boss Jeff Zucker—a close friend of Zaslav’s—abruptly resigned over an undisclosed romantic relationship with a subordinate. Zucker’s downfall complicated the high-profile debut of CNN+, a glossy streaming platform that the news channel had spent more than $300 million to get off the ground. CNN+ went live on March 29, just days before Discovery formally took over Warner Bros. Three weeks later, Zaslav officially killed it. The media feasted on the news for weeks.
Amid all this corporate intrigue, Zaslav generated yet another round of headlines—this time, for his sky-high compensation. Even for Zaslav, who frequently appears on lists of highly paid CEOs, it was an extraordinary year: In early March, Discovery’s board awarded him a compensation package worth $247 million. That total included a multiyear grant of options to buy future shares—but even stripping out what pay he has not yet “realized,” Zaslav still collected $71 million in 2021 compensation, according to Fortune’s analysis.
That’s an incredible payday even by the massively inflated levels of CEO compensation—and one that’s hard to reconcile with his performance. For all of Zaslav’s wheeling and dealing, his record is pretty lackluster—at least if you’re one of his company’s shareholders. Over Zaslav’s decade-plus as CEO, his company’s shares have handily underperformed the S&P 500—providing an annualized return of 5.8% vs. 9.4% for the broader market. And for the past three years, Discovery’s shares have woefully underperformed even its struggling entertainment industry peers, with an annual average return of –16.9% vs. –4.1%.
That chasm between pay and performance was almost enough to earn Zaslav the title of Most Overpaid CEO in the Fortune 500. But he fell just short. First place, instead, goes to Dexter Goei, head of struggling cable provider Altice USA, which has been hemorrhaging subscribers and broadband customers. According to Fortune’s calculations, Goei has been paid an average of $16.1 million in total compensation over the past three years. That’s a fraction of Zaslav’s three-year average of $62.7 million. But Goei’s company has fared even worse for shareholders over both his full six-year tenure and the latest three-year period. For these dubious distinctions, Fortune is naming Goei the Most Overpaid CEO in the Fortune 500 for 2022. Zaslav is No. 2.
A spokesperson for Warner Bros. Discovery declined to comment for this article. A spokesperson for Altice USA disputed Fortune’s analysis and said by email: “Mr. Goei’s compensation is fully aligned with the performance of the company,” and “we appreciate his leadership and commitment to our employees, customers, and shareholders.”
The business world has struggled with the challenge of CEO compensation for decades. How much more than the average worker is one top executive worth? What’s the proper way to align the incentives of the chief executives and the shareholders that own the publicly traded companies they run? The one constant in the debate is that CEO pay continues to soar. The average big-company CEO made 351 times the pay of the average worker on a realized basis in 2020, according to the Economic Policy Institute (EPI), which has tracked the metric for decades, up from a 21-to-1 ratio back in 1965. And as the examples of Goei and Zaslav illustrate, the size of CEO comp packages often appears completely disconnected to performance. “The pay system has been corrupted over many years—and now we’re at this place where it’s hugely disproportionate to any increase in stock value,” says Rosanna Landis Weaver, wage justice and executive pay program senior manager at As You Sow, a nonprofit shareholder-advocacy group.
To bring some performance-based rigor to this debate, this year we decided to crunch the data and rank the 10 Most Overpaid CEOs in the Fortune 500 (see below). We also identified the CEOs providing the best value for their compensation. And we used the same comprehensive analysis of the CEOs’ pay vs. performance record to identify both groups.
There are a multitude of ways to analyze how America’s top executives are paid, including by overall dollar figures and by how a CEO’s pay compares with her typical employee’s. (As You Sow, for example, has for the past eight years published its own list of the 100 Most Overpaid CEOs, which considers that CEO-to-worker pay ratio, as well as shareholder votes against pay packages and total returns to shareholders.) But any way you slice it, the record-setting compensation for Fortune 500 chief executives regularly infuriates shareholder groups, corporate governance experts, employees, and some lawmakers, especially in this age of expanding income inequality: In 2021, overall hourly U.S. wages fell 2.4% on average, when adjusted for soaring inflation. Meanwhile, the Fortune 500 CEOs that we evaluated earned a median total compensation of $15.9 million, up 30% from a year earlier.
To compile our rankings, we focused on pay vs. performance based on returns for shareholders. We analyzed the compensation and stock performance of the 280 Fortune 500 CEOs who have been in their jobs for at least three years—enough time to fairly assess their track records. Our assessment scored and ranked the CEOs based on four factors: total three-year CEO compensation; three-year share performance relative to that of their industry peers; annualized share performance over the CEO’s total tenure; and how that performance compared to the S&P 500 over the same period. (See our methodology below for more details.)
Our number-crunching identified Biogen CEO Michel Vounatsos as the third most overpaid CEO in the 500. Biogen announced in early May that Vounatsos would be stepping down. That news followed the disastrous rollout of the biotech’s controversial Alzheimer’s treatment, Aduhelm. Biogen’s board did cut Vounatsos’s 2021 bonus in half, “to hold him accountable for the Company’s overall business performance in 2021,” it said in its annual proxy statement. But that amounted to a slap on the wrist: Vounatsos, who is keeping his CEO seat until a replacement is named, still earned a bonus of $1.2 million, a salary of $1.5 million, and total 2021 compensation worth $15.1 million.
Fortune contacted all of the companies whose CEOs made our overpaid list and most of them, including Biogen, either declined to comment or did not provide a response. When contacted about CEO Thomas McInerney ranking No. 6 on our most-overpaid list, a Genworth spokesperson responded with an emailed statement citing the insurance company’s progress “toward reducing debt and strengthening our balance sheet,” and its readiness to “focus on the next chapter.” A spokesperson for Fidelity National Information Services cited the payments company’s “commitment to a pay for performance philosophy” and noted that more than two-thirds of CEO Gary Norcross’s realized income in 2021 “was related to the exercise of stock options that were granted between November 2014 and February 2015 and were nearing expiration.”
Those kinds of explanations don’t cut it for some CEO compensation watchers. “If you pay people regardless of how they perform, they’re less likely to perform,” says Nell Minow, a corporate governance expert and the vice chair of ValueEdge Advisors, a consulting firm.
Minow has a warning for the CEOs on this list—or at least for the board members and compensation consultants who determine their pay. A year ago a practically unknown, environmentally focused activist investment firm named Engine No. 1 stunned corporate America by defeating Exxon Mobil in a shareholder vote and successfully installed three of its directors on the oil giant’s board. Now, “the next Engine No. 1[-type] upset could well be over pay,” Minow predicts. “Shareholders are really disgusted.”
It’s not just shareholders. A wide range of business leaders, politicians, corporate governance experts, and worker advocates are sounding the alarm about the gaping—and toxic—wealth gap in America. Billionaire Ray Dalio, founder of the hedge fund Bridgewater Associates, has called income inequality a “national emergency.” At the other end of the ideological spectrum, U.S. senators Bernie Sanders and Elizabeth Warren have proposed wealth taxes and other legislation that would penalize companies for excessive pay.
“I am a capitalist. I’m for improving capitalism, not throwing it out,” says As You Sow’s Weaver. “It’s in people’s self-interest to try to contain this—because the political instability that is created by income inequality is a real danger. It’s a danger to democracy, and it’s a danger to capitalism.”
But so far none of these warnings—or policy proposals—have had much effect. 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. Soon Fortune 500 companies were jockeying for Patton’s advice on how to attract and retain top executives, by stuffing their pay packages full of bonus plans and stock option programs that would pay out excess rewards for share performance. 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.
It’s only gotten worse since then. From the late 1970s through 2020, realized compensation for chief executives rose 1,322%, according to the EPI. That far outpaces the gains investors got from the S&P 500 over the same period (817%).
$15.9 million
median total compensation THE FORTUNE 500 CEOS THAT WE EVALUATED EARNED in 2021
In 2018, the Securities and Exchange Commission began requiring public companies to disclose the ratio of CEO-to-median-worker pay, as mandated by the Dodd-Frank Act. The median ratio for the Fortune 500 CEOs was 205-to-1 last year. But some corporate overlords are earning much, much more: Amazon CEO Andy Jassy, who in July succeeded founder Jeff Bezos, had the highest CEO-to-worker ratio in the Fortune 500 last year. The retail Goliath, which has long faced complaints over working conditions in its massive warehouses, has been fiercely fighting unionization efforts at several facilities. Meanwhile, Amazon decided to award Jassy a 2021 pay package worth $213 million as granted—or 6,474 times the $32,855 median salary of Amazon’s employees.
Yes, much of that on-paper $213 million will vest over the next 10 years—so Jassy’s not taking it all home tomorrow. But it’s still a stunning windfall.
Amazon, which promoted Jassy from within, argues that it’s 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.
But can private employers contribute to a stable economy—not to mention a stable democracy—if they aren’t equally competitive about the welfare of all stakeholders, especially the workers who create their products and provide their services?
“Think of what the workers do at the bottom of the pile. If you’re going to give [the CEO] a big boost, you need to push some of that to your workers,” says Abigail E. Disney, the filmmaker and Disney heir who has become an outspoken critic of CEO pay, especially at the entertainment company her great-uncle and grandfather founded. “Of course shareholder value matters—but while capital should be rewarded for risk and time and all the rest of that, so should work be.”
Our rankings do offer good news for some C-suites, directors, and shareholders: Some of the biggest earners on the Fortune 500 aren’t actually overpaid. They are very highly paid—but justifiably so, according to their company’s stock market performance.
Tesla CEO and Twitter suitor Elon Musk, for example, earned compensation worth almost $23.5 billion in 2021, from exercising some Tesla stock options awarded in a 2018 multiyear “moonshot” grant. Musk doesn’t take a salary and didn’t receive any new compensation in 2021, but he does own 16% of the electric-vehicle company—and the rocketing value of Tesla stock over the past three years, despite the market’s recent slump, has wildly outpaced both the S&P 500 and the automotive industry. (All stock market data used in our rankings is through April 29, 2022, and doesn’t reflect May’s further plummet—or, in Tesla’s case, the ongoing fallout from Musk’s chaotic efforts to buy Twitter. Musk did not respond to requests for comment.)
Considering how much wealth he’s created for his company’s investors, Musk was even close to being “underpaid” last year, Fortune’s analysis finds. So are some of the other most highly paid tech CEOs on the planet. Apple’s Tim Cook earned $770.5 million in 2021 alone, mostly as a part of a 10-year grant of shares worth $1.7 billion. But his incredible pay package may be justified by Apple’s stock market performance under Cook: The tech company’s market value during his tenure has increased by $2.2 trillion. (An Apple spokesperson declined to comment.)
Our analysis didn’t attempt to factor in corporate malfeasance, controversies, or executive misbehavior—so long as such failures didn’t meaningfully damage the company’s share price. Take Activision Blizzard CEO Bobby Kotick, who earned $296.7 million last year, according to our calculations, from the value realized on vested restricted stock. He sits in the middle ranks of CEOs who were reasonably paid for their stock market performance—despite rampant employee complaints and several lawsuits over sexism, harassment, and Kotick’s personal mismanagement of assault claims at the game developer. Also despite these claims, Microsoft in January agreed to buy Activision for $68.7 billion, in what would be its largest acquisition to date. The deal juiced Activision’s stock, which is up 16% year to date—and if it wins regulatory approval and closes, Kotick could potentially walk away with another $500 million. Activision’s justification for that payout? 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.”
Fortune’s analysis of CEO pay also does not reflect any of the environmental and social goals that many large companies say they are embracing, in the name of “stakeholder capitalism.” In practice, these goals have yet to account for a significant chunk of CEO compensation: In 2021, 50% of companies included ESG in their compensation targets, up from 30% two years earlier, according to an April report by Compensation Advisory Partners. But the consulting firm acknowledges that those goals only account for “usually 5% to 15% percent” of annual incentives. “By far, CEOs are still mostly paid out on financial performance,” says Lauren Peek, a principal with CAP.
The Most Overpaid CEOs in the Fortune 500 may be one of the few lists where no one’s going to advocate for more diversity. And the top 10 overpaid earners are all men and almost all white—the demographic that still runs the C-suites at most of the largest companies in America. Women account for just 8.8% of Fortune 500 CEOs, and Black executives for 1.2%—and many of these leaders have been in their roles for less than three years, excluding them from our analysis. (It’s also worth noting that women, and especially women of color, still earn less than men do on average.)
But a handful of female CEOs do hover near “overpaid” status, according to our analysis, including Kohl’s Michelle Gass, GM’s Mary Barra, and Occidental Petroleum’s Vicki Hollub. (All declined or did not respond to requests for comment.)
At the other end of the pay-for-performance spectrum, CDW’s Christine A. Leahy and AMD’s Lisa Su are closer to being among the most “underpaid” CEOs in America. So is Marvin R. Ellison of Lowe’s, the only Black Fortune 500 CEO who’s been in that post for at least three years at a company that has been publicly traded for that entire span.
So yes, some Fortune 500 CEOs may actually deserve a raise—at least when accounting for how much money they’ve made for their investors. The CEO who ranks No. 1 on our list for best performance for his pay is Moderna’s Stéphane Bancel. Moderna is making its debut on the Fortune 500 this year at No. 195, powered by more than $18 billion in sales of its Spikevax COVID-19 vaccine, which it created in record time using innovative mRNA technology. Bancel took home $3.2 million in 2021 in realized pay and about $9 million over the past three years—while overseeing a 74.8% annualized return to shareholders during that period. Moderna’s vaccine has also saved countless lives. That’s the kind of performance it’s hard to put a price on.
The 10 Most Overpaid CEOs in the Fortune 500
We analyzed and ranked the pay vs. performance record of every CEO in the 500 who has been in the job for at least three years. These execs came out on top by scoring the worst. Sources: Bloomberg; S&P Global
1. Dexter Goei, Altice USA
Pay vs. Performance Composite Score*: 1000
3-year average compensation: $16.1 million
Company 3-year total return annualized: –26.8%
Industry median 3-year total return annualized: –1.5%
Goei isn’t the highest paid CEO on our list. But he ranks No. 1 because Altice’s stock has underperformed so dramatically. Over the nearly six years of Goei’s tenure, the cable provider’s stock has returned an annual average of –21% while the broader market has returned 13.5% annually. The company, which lost thousands of residential broadband and video subscribers in 2021, calls this a “year of reinvestment” and stands by Goei’s pay.
2. David Zaslav, Warner Bros. Discovery
Pay vs. Performance Composite Score*: 957
3-year average compensation: $62.7 million
Company 3-year total return annualized: –16.9%
Industry median 3-year total return annualized: –4.1%
The head of Warner Bros. Discovery frequently makes appearances on lists of highly paid CEOs. But for the past three years, Discovery’s shares have woefully underperformed even its struggling entertainment industry peers, with an annual average return of –16.9% vs. –4.1%. A spokesperson declined to comment.
3. Michel Vounatsos, Biogen
Pay vs. Performance Composite Score*: 938
3-year average compensation: $13.4 million
Company 3-year total return annualized: –3.3%
Industry median 3-year total return annualized: 15.1%
Following the disastrous launch of Biogen’s controversial Alzheimer’s treatment, Aduhelm, the biotech announced that the CEO will be stepping down once his replacement is named. But Vounatsos still collected a $1.2 million bonus for 2021—and total compensation worth $15.1 million. A spokesperson declined to comment.
4. John Visentin, Xerox Holdings
Pay vs. Performance Composite Score*: 916
3-year average compensation: $10.7 million
Company 3-year total return annualized: –15.6%
Industry median 3-year total return annualized: 6.7%
During his four years as CEO, Xerox has provided annualized returns to shareholders of –8.4%, vs. 13.9% for the S&P 500. A spokesperson declined to comment.
5. James Loree, Stanley Black & Decker
Pay vs. Performance Composite Score*: 899
3-year average compensation: $14.4 million
Company 3-year total return annualized: –4.9%
Industry median 3-year total return annualized: 11.6%
His manufacturing company is No. 212 on this year’s Fortune 500. Loree became CEO in August 2016 and has since provided meager annualized returns of 1.5%.
6. Thomas McInerney, Genworth Financial
Pay vs. Performance Composite Score*: 893
3-year average compensation: $10.6 million
Company 3-year total return annualized: –1.3%
Industry median 3-year total return annualized: 7.1%
Some of the insurance company’s financial woes predate McInerney, who became CEO in 2013. A spokesperson says Genworth has made “strategic progress.”
7. Gary Norcross, Fidelity National Information Services
Pay vs. Performance Composite Score*: 884
3-year average compensation: $58.8 million
Company 3-year total return annualized: –2.7%
Industry median 3-year total return annualized: 7.3%
The payments company CEO took in $67.4 million in comp last year, mostly by exercising stock options granted in 2014 and 2015.
8. Richard Kramer, Goodyear Tire & Rubber
Pay vs. Performance Composite Score*: 880
3-year average compensation: $10.4 million
Company 3-year total return annualized: –10.2%
Industry median 3-year total return annualized: –1.3%
Like many of his peers on this list, Kramer runs a Fortune 500 stalwart selling pre-internet products; he took home $20.8 million in realized pay last year.
9. Ryan Schneider, Realogy Holdings
Pay vs. Performance Composite Score*: 878
3-year average compensation: $7.5 million
Company 3-year total return annualized: –4.8%
Industry median 3-year total return annualized: 12.5%
The owner of Century 21, Coldwell Banker, and other residential real estate brands paid its CEO $14.2 million in 2021. A spokesperson declined to comment.
10. Richard Johnson, Foot Locker
Pay vs. Performance Composite Score*: 861
3-year average compensation: $6.5 million
Company 3-year total return annualized: –18.4%
Industry median 3-year total return annualized: 3.2%
Physical retailers like Foot Locker may be struggling—but with almost $6.8 million in compensation last year, Foot Locker’s chief executive isn’t.
*Out of 1120 possible. A higher number means more overpaid.
Best bang for the buck
Some CEOs may actually deserve a raise—at least when accounting for how much value they’ve made for their investors. These men had the lowest scores on our pay vs. performance ranking, making them the most underpaid Fortune 500 chief executives in 2021.
1. Stéphane Bancel, Moderna
Years as CEO: 11
Company’s annualized total return over tenure: 79.1%
S&P 500 annualized total return over CEO’s tenure: 16.2%
3-year average compensation: $3.1 million
By almost any measure, Bancel overwhelmingly earned his pay during the pandemic. Moderna’s COVID-19 vaccine, created in record time, generated more than $18 billion in sales and vaulted the biotech firm onto the Fortune 500 for the first time. It also saved countless lives. Bancel’s compensation was well below the CEO median—but in May, he pledged to exercise options from 2013 and donate the after-tax proceeds, an estimated $355 million, to charity.
2. Gregory Roberts, A-Mark Precious Metals
Years as CEO: 17
Company’s annualized total return over tenure: 27.4%
S&P 500 annualized total return over CEO’s tenure: 12.5%
3-year average compensation: $1.4 million
His gold-trading platform has provided top value for investors.
3. Jack Dorsey, Block
Years as CEO: 13
Company’s annualized total return over tenure: 37%
S&P 500 annualized total return over CEO’s tenure: 13.3%
3-year average compensation: $3
This founder doesn’t need a paycheck; he owns $4.1 billion worth of Block shares.
4. Earl Austin Jr., Quanta Services
Years as CEO: 6
Company’s annualized total return over tenure: 32.3%
S&P 500 annualized total return over CEO’s tenure: 14.8%
3-year average compensation: $10 million
Last year, this CEO of a utilities contractor collected $3.8 million in realized comp.
5. Dan Arnold, LPL Financial
Years as CEO: 5
Company’s annualized total return over tenure: 38.6%
S&P 500 annualized total return over CEO’s tenure: 14.1%
3-year average compensation: $11.6 million
He led the broker-dealer at its Fortune 500 debut last year; this year, it’s No. 442.
6. Sean O’Connor, StoneX Group
Years as CEO: 20
Company’s annualized total return over tenure: 27.2%
S&P 500 annualized total return over CEO’s tenure: 10.6%
3-year average compensation: $5.7 million
His brokerage and commodities trading platform has spent more than a decade on the Fortune 500, and is No. 87 on this year’s list.
7. R. Andrew Clyde, Murphy USA
Years as CEO: 9
Company’s annualized total return over tenure: 23.1%
S&P 500 annualized total return over CEO’s tenure: 13.3%
3-year average compensation: $10.4 million
Gas prices are soaring—but given the market performance of this gas-station operator, the CEO’s realized pay is a relative bargain.
8. Warren E. Buffett, Berkshire Hathaway
Years as CEO: 57
Company’s annualized total return over tenure: 15.8%*
S&P 500 annualized total return over CEO’s tenure: 10.8%
3-year average compensation: $0.4 million
*Since first available price, Jan. 4, 1988.
His pay is pocket change for the 91-year-old billionaire investor, who’s made a career—and a fortune—from beating the market.
9. Matthew Missad, UFP Industries
Years as CEO: 11
Company’s annualized total return over tenure: 24.6%
S&P 500 annualized total return over CEO’s tenure: 13.4%
3-year average compensation: $4.1 million
The longtime CEO of this wood-products company realized pay of $5 million last year—less than a third of the median $15.9 million earned by everyone we evaluated.
10. Bryan DeBoer, Lithia Motors
Years as CEO: 10
Company’s annualized total return over tenure: 27.7%
S&P 500 annualized total return over CEO’s tenure: 13.6%
3-year average compensation: $9.8 million
His company, which operates car dealerships, has raced up the Fortune 500 and outpaced the market’s performance.
The methodology
Here’s 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 year’s Fortune 500. Then we screened for CEOs who had been in the job for at least three years. We did this for two reasons: First, to make sure that the executives had track records long enough for a fair assessment; second, because a volatile stock market or an unusually large gain from exercising options can skew results for a single year. We ended up with 280 CEOs who have at least three years of pay history as CEO; whose companies’ shares have been trading for at least three years; and whose companies had disclosed their 2021 compensation by our cutoff date of May 2.
We then graded the 280 CEOs using four factors: total three-year CEO compensation; three-year share performance relative to that of their industry peers; annualized share performance over a CEO’s total tenure; and how that performance compared with the S&P 500 over the same period. CEOs received a score from 1 to 280—higher being worse—in each of the four categories, and we weighted each equally. Then we added up the four scores for a total composite (max score: 1120) to determine the final ranking.
When calculating a CEO’s total pay, we measured the following for the company’s 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. Because the value of unexercised options is unpredictable, we did not consider them in our tabulation of total compensation.
A version of this article appears in the June/July 2022 issue of Fortune with the headline, “Maximum wage.”
