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Technology: pay and profit in the S&P 500

No sector is more internally divided. Technology contains both the best-paid workforces in the S&P 500 and the four widest pay ratios in it, and the difference is where the employees are.

Technology's sector median of 258:1 is unremarkable, sitting above the index median of 196:1 and below Consumer Discretionary. That figure conceals the widest internal spread of any sector in the S&P 500: from Palantir at 23:1 to Lumentum at 2,884:1, a range of more than a hundredfold.

Two different industries share one label

The sector's median worker pay of $98,000 is a midpoint between two populations that barely overlap.

At one end are the software and platform businesses, which grant equity broadly to ordinary employees. Broadcom reports a median of $378,281, Nvidia $282,050, Intuit $242,190, Adobe $235,989, Palantir $235,115. A software engineer's disclosed compensation at these firms is salary plus an annual stock refresh, and the median captures both.

At the other end are the hardware manufacturers, whose production workforces sit almost entirely outside the United States:

These companies produce four of the five widest pay ratios in the entire S&P 500, and their chief executives are not unusually paid. Western Digital's three-year average CEO compensation is $11.5 million, below the index median in absolute terms, and the company still posts a 1,320:1 ratio. Flex's is $25.3 million against 150,000 employees, most of them production staff in Asia, Mexico and Eastern Europe.

The disclosure rule requires the global workforce to be included, so these ratios divide an American executive package by a global manufacturing median. The arithmetic is right and the comparison is between labour markets, not between a boss and their staff. This effect is the subject of a longer piece.

Where the sector's ratios are genuinely notable

Apply the test that a high median makes the denominator explanation unavailable, and two companies stand out.

Intel reports 809:1 against a median of $114,900, one of the better-paid workforces in the index. A three-year average CEO compensation of $93.0 million puts it here, and there is no compositional story to fall back on. Intel is also worth noting as a company that averaged a loss over the three-year window, one of five loss-makers in the sector.

Coherent at 2,308:1 is a hybrid: a $22,791 median from global photonics manufacturing, combined with a $52.6 million three-year average inflated by a large inducement grant to an incoming chief executive. Both halves contribute.

Profit per employee, and the pay-versus-profit picture

The sector's median profit per employee is $76,327, but the distribution is extremely skewed. AppLovin generates $1.96 million per head across 898 employees; Nvidia $1.77 million across 42,000, which is the more remarkable figure because scale usually erodes it. Verisign reaches $872,845 across 928 people, and Apple $607,892 across a very large workforce.

Nvidia is the sector's clearest case of both measures agreeing: extraordinary profit per employee, and a median worker pay of $282,050 that is among the highest in the index. Its workers capture a meaningful share of an enormous surplus, and its ratio of 142:1 is below the sector median.

The contract manufacturers sit at the opposite corner on both. Flex generates $6,067 of profit per employee, near the bottom of the entire index, against a $12,939 median. There is little surplus, and the workers are poorly paid within it.

Every technology company in the S&P 500

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