By Danielle Kirsh, Senior Editor
Major medical device companies are now disclosing how much their median employees make — and comparing it to CEO pay.
Illustration by Morgan Housel via Unsplash
For the first time, we’re ranking medical device CEO pay and comparisons to the wages earned by their employees as part of our Medtech Big 100 report.
The relatively new disclosure of these CEO pay ratios — which show how many times higher a CEO’s total pay is than their median worker’s pay — has shed new light on the medical device industry’s compensation practices.
These figures are rare public data points on pay in an industry where recruiting and retaining top talent is crucial. At the same time, medtech investors are increasingly scrutinizing executive pay. In recent years, companies like Masimo, Henry Schein and Zimmer Biomet faced pushback from shareholders in advisory “say-on-pay” votes on their executive pay packages.
Due to the wiggle room the SEC gives companies in calculating their median worker’s wage (excluding certain foreign workers, for example), you shouldn’t consider median wages or pay ratios to be equally comparable across different companies. But if you’re a medtech engineer weighing your options in the field, they offer information about prospective employers that’s hard to come by anywhere else.
Methodology
We used total CEO compensation and pay ratios as reported by publicly traded companies in filings with the U.S. Securities and Exchange Commission. Total compensation includes salary and/or 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.
We included the CEOs of Abbott, 3M and Johnson & Johnson because they have prominent medical device businesses. However, we also included the leaders of the healthcare businesses within those companies if their pay was disclosed: Ashley McEvoy (Johnson & Johnson MedTech worldwide chair), Jeffrey Lavers (3M Health Care interim group president) and Steve Mason (Cardinal Health’s medical segment CEO) run some of the largest medical device divisions in the Big 100.
The SEC gives new companies extra time to file proxies and pay ratio disclosures. As such, new spinoff companies Embecta, GE HealthCare and ZimVie do not yet disclose CEO pay ratios, but they do disclose CEO total compensation.
How do medtech executives stack up?
Average annual compensation among all the CEOs and executives in our analysis was $10.2 million. The average median employee’s salary was $76,068 and the average pay ratio among the companies that filed proxies was 220:1.
The highest-paid CEO in the medical device industry is not at the largest company. Abbott CEO Robert Ford topped the list, earning $21.7 million in compensation in 2022. However, Abbott makes more than medical devices – it has nutritional, diagnostic, medical device and pharmaceutical divisions.
With $18.7 million in total compensation, Align Technology CEO and President Joseph Hogan is the highest-paid medtech executive among publicly traded Big 100 companies that focus on devices.
Align Technology, which makes the Invisalign clear dental aligners, stood out for its pay ratio of 1,026:1, the widest gap in our analysis.
The company did not respond to an offer to provide more context, but said in its proxy filing with the SEC: “The objective of our executive management compensation program is to encourage our corporate leaders to achieve our financial and strategic objectives, thereby creating long-term value for our stockholders.”
At the other end of the range, Penumbra CEO Adam Elsesser had the lowest pay of our analysis at $601,620, almost all of it from salary, while the median employee pay amounted to $77,926, resulting in a pay ratio of 8:1. Elsesser is also the lowest-paid CEO of the U.S.-based Big 100 companies that filed proxies within the last year.
Penumbra characterized Elsesser’s pay package as “below market,” saying that the CEO has “expressed a preference to the Compensation Committee that his cash compensation be modest so we could invest in other areas of the business.”
At the world’s largest medical device company by revenue, Medtronic Chair and CEO Geoff Martha made $15.4 million in fiscal 2023. That’s a 14% decrease from 2022, primarily due to Martha receiving nothing this year under the Medtronic Incentive Plan. Medtronic’s median employee pay was $67,073, resulting in a CEO pay ratio of 230:1.
Medtronic’s 2023 revenue decreased 1% year-over-year to $31.2 billion, while profits decreased 25% to approximately $3.8 billion.
The table below highlights the 20 companies with the highest CEO pay ratios. Hover over each bubble for a closer look at the data.
Chart data sourced from Medical Design & Outsourcing.
* Former CEOs that are noted in the company’s proxy filings
The highest and lowest median wages in medtech
Inspire Medical Systems reported the highest median wage of $266,163, followed by Shockwave Medical ($167,938), Inari Medical ($163,160) and Nevro ($153,039). These companies all spend a relatively high percentage of their revenue on R&D.
Owens & Minor had the lowest median wage at $6,216, followed by Avanos Medical ($6,786) and Align Technology ($18,215). These companies have a large share of their workforces in foreign countries.
For example, Align Technology said 9% of its employees work in the U.S. and that its median employee is a CAD designer at its treat facility in Costa Rica.
“Compensation rates are benchmarked and set to be market-competitive in the country in which the jobs are performed,” the company said in its proxy, adding that the company doesn’t use the CEO pay ratio for making compensation decisions and only calculated the pay ratio to comply with the law.
Below is a sortable list of the top-paid CEOs, ranked by total compensation. The median employee salary and pay ratios are also listed.
Explore the table and rank by median or CEO pay, revenue, headcounts, or alphabetically by CEO and company to see which companies rank the highest – and check out our Medtech Big 100 list of the largest medical device companies in the world.
— Managing Editor Jim Hammerand contributed to this report.
* Former CEOs that are noted in the company’s proxy filings
** Former CEO, pre-merger