Medtech CEO compensation averaged $10.5 million during the companies’ most recent fiscal years.
That number from our recent MassDevice analysis may seem like a lot to an average person — but not as much in the world of corporate CEOs.
In fact, the average compensation of S&P 500 company CEOs was $25.2 million in 2022, according to the Economic Policy Institute (EPI), a nonprofit research institute that studies the impact of economic trends and policies on working people in the U.S.
Geoff Martha, who, as CEO of Medtronic, runs the world’s largest medical device company, saw a total compensation of $15.4 million. But look over at the pharmaceutical industry, where revenue numbers are much higher, and the head of the world’s largest pharma company — Pfizer CEO Albert Bourla — brought in $33 million.
As businesses mature into publicly traded companies and revenue grows, it makes sense for CEO compensation to become larger.
“The earlier the company is, especially if it’s a product that’s not approved, [executives] usually get nothing above equity and base salary because there’s no revenue yet. And then, as companies get bigger, it wouldn’t be unusual for salaries to double,” said Holly Scott, VP and senior partner at executive search firm The Mullings Group. “Once you get into a publicly traded company, it really is more of a factor of revenue and scale than it is of anything else.”
Delving into the details of medtech CEO compensation packages provides insights into how the companies seek to attract and retain leadership talent — and how companies’ financial success directly impacts top executives’ pay.
Investors have also increasingly scrutinized executive compensation. Companies like Masimo, Henry Schein and Zimmer Biomet, for example, have faced shareholder pushback in advisory “say-on-pay” votes on executive pay packages. (Here’s a separate analysis of how medtech CEO salaries compare to median worker wages.)
Here’s the methodology behind our medtech CEO compensation analysis
We used total CEO compensation, salary and all other compensation payments as reported by publicly traded companies in filings with the U.S. Securities and Exchange Commission. Total compensation includes salary, bonuses, stock awards, options and all other compensation. Our analysis focused on 51 companies in our Medtech Big 100 list that filed proxies with relevant disclosures.
The information is current as of January 2, which means some companies with leadership changes (like Zimmer Biomet and J&J MedTech) have not had an updated proxy filing to reflect the changes.
Which CEOs have the largest bonus payouts?
The average bonus package among all the CEOs and executives in our analysis was $9.5 million and the average salary was $985,942. Total compensation averaged $10.5 million.
Abbott CEO Robert Ford had the highest bonus payment structure of the 55 executives in our analysis. He had a bonus package of over $20.2 million and a salary of $1.5 million. However, it’s important to note that Abbott sells more than medical devices – it has nutritional, diagnostic, medical device and pharmaceutical divisions. Cardinal Health CEO Jason Hollar also had a notable bonus package totaling over $17.5 million, but Cardinal Health also has several divisions that aren’t medtech.
With nearly $17.4 million in total bonus payments, Align Technology CEO and President Joseph Hogan is the highest-paid medtech executive among publicly traded Big 100 companies focusing on devices. Align Tech — which 3D scans and prints customized, clear dental aligners — also had the highest pay ratio among all device companies in our August analysis at 1,026:1.
“We believe the design of our executive management compensation program is instrumental in helping us successfully execute our strategic growth drivers and reward financial performance when earned,” Align Tech said in a proxy filing with the SEC.
Larger medical device companies, like Abbott, have more revenue and profitability, translating into more responsibility for executives and greater compensation for its leadership.
“Once an individual starts answering to The Street and they’re a more public-facing company, they tend to make more money and have more upside,” Scott said. “That’s because that role is so dynamically different.”
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(Read to the end for a sortable table of the compensation packages of the medtech CEOs in our analysis)
Scott also noted that startup CEOs could have just as much stress as the leaders of publicly traded companies. That’s because they must raise money and talk to multiple investors to get the company off the ground. Big medtech doesn't have that responsibility to individual investors – they answer to the bigger population.
In 2022, Hogan saw a 13% reduction in pay compared to the previous year. The drop was due to Align Tech's financial performance falling short of expectations, caused by factors such as currency exchange, economic conditions and the pandemic's impact, according to the company's proxy filing. About 91% of Hogan's pay was based on how well the company met its goals.
Typically, everything incentive-based at the C-suite is milestone-based, Scott said. Executives in pre-approval companies may have a bonus tied to clinical enrollment or regulatory hurdles and milestones. As a company gets more profitable, compensation could be tied to sales and sales expansion and even globalization and new indications or approvals.
These substantial bonuses indicate these CEOs' significant impact and accomplishments within their respective companies. Executive compensation is multifaceted, influenced by company performance, market dynamics and industry standards.
The smallest medtech CEO compensation packages
The lowest bonus payout was Penumbra CEO Adam Elsesser. He takes in a mere $1,620 in bonuses on top of his $600,000 salary, also the lowest in our analysis.
As we previously reported, Elsesser's pay package is below market value as he "expressed a preference to the Compensation Committee that his cash compensation be modest so we could invest in other areas of the business," according to an SEC filing.
At the world's largest medtech company, Medtronic CEO Geoff Martha has a bonus structure that is valued at just over $14 million, making his entire compensation package worth $15.4 million. That is a 14% decrease from 2022 due to company incentive plan changes. Medtronic said in an SEC filing that Martha did not receive a bonus under the Medtronic Incentive Plan because the company's financial performance was below the expectations for the year.
Medtech CEO compensation versus other industries
According to an analysis of CEO compensation across diverse sectors, ranging from medical devices and pharmaceuticals to retail and energy, medtech executive salaries are generally not as high as those of other industries. For this analysis, we looked at the largest medical device companies in the world by revenue and did the same for pharmaceutical companies, which was based on Drug Discovery & Development's Pharma 50 analysis of the largest pharmaceutical companies. We also included the top companies listed at the top of Fortune Magazine's Fortune 500 list.
Pharma CEOs generally make a lot more than medtech CEOs. But even CEOs in non-medtech and non-pharmaceutical companies have distinctive compensation models that can vary a lot from what medtech executives make. Douglas McMillon of Walmart had a total pay of $25.3 million during the retail giant’s most recent fiscal year. Andrew Jassy, leading Amazon, received $1.3 million, though he got a whopping $212 million in stock awards in 2021. In the energy sector, Darren Woods of ExxonMobil stands out with a total compensation of $35.9 million.
How market conditions affect CEO pay
Medtech CEO compensation is dependent on the stock market and declines in the market over the last few years have led to an "uncharacteristic dip" in the compensation packages of CEOs, according to the Economic Policy Institute (EPI).
Market conditions in medtech have fluctuated since the start of the COVID-19 pandemic. In 2020, many companies in the industry benefited from COVID-related sales: Some companies soared and others survived. Many of the most compensated CEOs were leading companies developing COVID tests, personal protective equipment or CPAPs and respirators. Now, many companies are grappling with economic uncertainties as COVID-related sales burst and health provider customers crapple with their own operational challenges.
The average compensation of S&P 500 CEOs was $25.2 million in 2022. EPI reports that stock-related increases have contributed to the increase in CEO compensation over time. Stock awards and options comprised 70.2% of total CEO compensation in 2006 and increased to 81.3% in 2022.
For comparison, Abbott CEO Ford's compensation is 80.1% stock options and stock awards, for a total of $17.4 million out of his $21.7 million total pay. He joined Abbott in early 2020, so his pre-COVID compensation is unavailable.
The earliest proxy filing for Abbott was in 2017, when it showed that former CEO Miles White had a total compensation package of $20.3 million, of which 53% comprised stock awards and option awards. That is a 27-percentage-point increase in just six years.
Of the top 20 highest-paid medtech CEOs, Hogan of Align Technology has the largest percentage of stock options and awards at 93% of his $18.7 million total compensation. In 2016, stock awards accounted for 56.3% of his total compensation, according to an SEC proxy filing.
Explore the interactive table below to see how the compensation packages of executives at the largest medical device companies stack up. Each column can be sorted ascending or descending to your preference.