Virginia CEO compensation continues climbing

It’s nice work if you can get it.

Virginia CEOs made an average of $10.17 million in total compensation in 2024, up from $9.4 million in 2023 — a 7.8% increase year-over-year. And the average compensation for S&P 500 CEOs last year was $18.9 million, a 9.2% increase from 2023, according to data analyzed for the Associated Press by California-based Equilar, a corporate leadership data firm.

CEOs in the commonwealth make less on average than their national peers because executive compensation tends to vary by industry, hypothesizes Equilar Director of Research Courtney Yu.

For example, “tech companies usually tend to pay their CEOs quite a bit more, so industry is a large part,” he says, noting that the Old Dominion doesn’t have as high a concentration of tech companies as California.

To determine executive pay, Equilar tallies salary, bonus, perks, stock awards and other compensation. Altogether, Equilar examined CEO compensation data for 51 Virginia-based public companies with annual revenues of $1 billion or more.

According to data provided by Equilar, Virginia’s most highly compensated CEO in 2024 was Capital One Financial founder, Chairman and CEO Richard D. Fairbank. Last year, his total compensation was

$29.85 million, a 9% increase over 2023, when he pulled down roughly $27.4 million.

It makes sense that Fairbank made bank in 2024, according to Lei Gao, an associate professor of finance who studies executive compensation at George Mason University’s Costello College of Business.

In February 2024, McLean-based Capital One announced its plan to acquire Discover Financial Services in a blockbuster transaction valued at $35.3 billion.

An acquisition of one gigantic credit card company by another doesn’t happen every day, says Gao. “It takes a lot of effort and potentially has a significant wealth impact, so stockholders are happy,” he says.

It’s a safe bet Fairbank will be among Virginia’s most handsomely paid executives for 2025 as well.

Capital One’s board voted to award Fairbank with stock valued at $30 million to recognize the “ongoing and anticipated work” relating to the Discover deal, according to a June 5 financial filing with the U.S. Securities and Exchange Commission, although his bonus won’t fully vest until 2030. The Discover acquisition closed in May.

Highs and lows

Coming in second place for highest total compensation among Virginia CEOs of public companies was Christopher J. Nassetta, president and CEO for Hilton Worldwide Holdings, the global hospitality company headquartered in McLean. Nassetta made about $27.96 million in total compensation in 2024, a 5% increase over 2023, when he made $26.56 million.

Last year was a good one for Hilton. The company added 973 hotels and nearly 100,000 rooms in 2024 — the single biggest increase in rooms in its 106-year history.

For 2024, Hilton reported a net income of $1.5 billion, exceeding a third quarter earnings projection of full-year net income between $1.4 billion and $1.42 billion. The hospitality company reported $11.17 billion in revenue.

During a February earnings call, Nassetta said, “Given our strong momentum, robust pipeline and resilient fee-based business model, we’re confident that we are well-positioned to continue driving strong performance in 2025 and beyond.”

Kathy J. Warden, president, CEO and chair of Falls Church-based aerospace and defense contractor Northrop Grumman, had the third-highest total compensation in 2024 among Virginia CEOs of publicly traded companies. In a year when Northrop Grumman reported $41 billion in sales, a 4.4% year-over-year increase, Warden made about $24.1 million, a 2% increase from the $23.53 million she earned the year before.

However, Warden received the highest base salary among Virginia CEOs in the survey: $1.79 million. (At the other end of the spectrum, Fairbank received nothing in base salary. That’s in keeping with his long-term practice of being paid primarily in company stock.)

Nationally, the highest-paid CEO identified in the Equilar/AP survey of S&P 500 CEO compensation was Patrick W. Smith of Arizona-based Axon Enterprise, which makes Taser stun guns and body cameras. Smith earned $164.5 million in total compensation for 2024, a year when Axon posted record annual net income of $377 million.

Among Virginia CEOs, the executive who saw the biggest drop in total compensation in 2024 was Carey Smith, chair, president and CEO of Chantilly-based defense contractor Parsons.

Smith received about $10.99 million in 2024, a 41% decrease from the $18.58 million she earned in 2023.

However, that pay dip is due to a one-time equity award package Smith received in 2023 partly as a performance reward. After all, Parsons reported $235 million in net income last year, a 46% year-over-year increase.

In 2023, Smith saw the biggest increase in earnings, with her compensation increasing 167% year-over-year, from $6.97 million in 2022 to about $18.58 million in 2023. The bulk of her 2023 compensation came from that equity award package, which totaled about $15.22 million.

“After considering Ms. Smith’s performance as CEO, her unvested equity holdings, and the competitive market for CEO pay in our sector, the compensation and management development committee approved a one-time equity award package,” the company said in its 2024 proxy statement.

Rewarding performance

Equity compensation, which can include stock options or other ownership stakes in a company, is the biggest driver behind a CEO’s compensation, according to Yu. It’s a way that shareholders can make sure executives have skin in the game.

“They want the executives to have as much of the compensation tied to the stock price as possible, so that they are feeling the same risks as shareholders,” he explains.

The average equity award in 2024 was about $6.95 million. The largest equity award made to a Virginia CEO in the 2024 survey was $24.24 million, which went to Fairbank.

Due to equity awards, Dominion Energy Chair, President and CEO Bob Blue was the Virginia CEO who saw the biggest percentage gain in total 2024 compensation. He made $12.11 million in total compensation last year — a 141% increase over 2023, when he received $5.03 million, according to Equilar data. Equity awards accounted for $8.5 million of his total 2024 compensation.

Approximately 89% of Blue’s targeted 2024 total direct compensation was performance-based, according to a proxy statement Dominion Energy issued in March.

Blue’s big pay boost didn’t go unnoticed by the Fortune 500 utility’s critics. Brennan Gilmore, executive director of Clean Virginia — a nonprofit founded by Charlottesville investor Michael Bills to fight “utility monopoly corruption in Virginia politics” — said in an April statement, “Dominion’s CEO is handed a premium for rewarding the company’s shareholders, not responding to the needs of its captive customers.”

Dominion, though, summed up Blue’s job performance this way in a proxy filing: “During his tenure, the company began addressing unprecedented load growth in our service area, conducted a transparent business review, advanced the [Coastal Virginia Offshore Wind] commercial project, grew our clean energy portfolio and had one of its safest years for our employees in the company’s history.”

In addition to equity awards, Virginia CEOs also profited from bonuses, averaging $1.88 million apiece in 2024. On average, Virginia CEOs on the job for more than two years saw their bonuses grow 13.6% over the previous year.

“I think the growth in bonuses kind of signals just how well companies did in Virginia,” Yu says.
Fairbank earned the biggest bonus among Virginia CEOs of publicly traded companies, reaping $5.5 million. Warden came in second, with $5.19 million.

And two Virginia CEOs tied for the largest percentage gain in their bonus pay last year. John M. Steitz, president and CEO of Tredegar, the Chesterfield County-based plastic films and aluminum extrusions manufacturer, and Bruce L. Caswell, president and CEO of Tysons government contractor Maximus, saw 233% increases in their bonus pay. Steitz received about $938,000, while Caswell earned $2.97 million in bonus pay in 2024.

Odds and ends

At a time when Tesla’s board is negotiating an unprecedented 10-year, $1 trillion compensation package for Chief Executive Elon Musk, don’t expect CEO pay to decline in 2025. Given how well the stock market has performed this year, as well as how companies have mitigated tariff impacts, Yu expects CEO compensation to remain on course.

In its CEO pay report, Equilar also tracked “other compensation,” which includes perks like the use of company aircraft, a car and driver, or security services. In Virginia, the average value of such added compensation for the 51 CEOs in the survey was $154,609.

In an analysis of 208 S&P 500 companies released earlier this year, Equilar found there had been a 36.3% upturn between 2023 and 2024 in spending for CEO security.

It’s unclear whether that increase was driven in part by the highly publicized Dec. 4, 2024, killing of UnitedHealthcare CEO Brian Thompson. But “as the 2025 proxy season draws to a close, it is anticipated that more companies will highlight enhanced security perquisites as a part of executive pay packages,” according to Equilar.

Last year, for example, Dominion Energy said in a 2024 proxy statement that its CEO, Blue, who received the equivalent of $166,843 in other compensation last year, shouldn’t fly commercial for safety’s sake. “For security and other reasons, the board has encouraged Mr. Blue to use the corporate aircraft for air travel, including personal travel,” the document states. “Mr. Blue’s family and guests may accompany him on any personal trips.”

Regarding gender equality, four women were among the 51 Virginia CEOs whose compensation Equilar studied, comprising 7.8% of the list. Nationally, of the CEOs heading Fortune 500 companies in 2024, 10.4% were women.

In addition to Warden, two other top-paid women CEOs of Virginia companies are Phebe Novakovic, chairman and CEO of Reston-based General Dynamics, and Toni Townes-Whitley, CEO of Reston’s SAIC (Science Applications International Corp.). Novakovic made about $23.8 million in total compensation in 2024, and Townes-Whitley, who was named SAIC’s chief executive in 2023, received $10.24 million.

Meanwhile, at Virginia’s top-ranked Fortune 500 company, Freddie Mac, its former CEO, Diana Reid, made just $205,258 for leading the McLean-based government- backed mortgage financing provider in 2024. That’s because she started the role in September 2024. However, she probably earned even less for 2025 because the Trump administration fired her in March.

Also worth noting in this year’s executive compensation data is the nation’s widening wealth gap between CEO pay and median employee pay.

The Washington, D.C.-based Institute for Policy Studies, a left-of-center think tank, released a report Aug. 21 that found the wage gap between CEOs and workers at the 100 S&P 500 companies with the lowest median worker pay rose by almost 13% between 2019 and 2024.

In the Equilar/AP survey of S&P 500 companies’ compensation, workers earned a median pay of $85,419 in 2024, a 1.7% increase year-over-year. At half of those companies, it would take a worker at the middle of a company’s pay scale 192 years to make what their CEO earned in one year.

Among the Virginia public companies with the highest paid top executives, CEO and employee compensation ratios varied widely. The median pay ratio was 219:1, with median worker pay totaling about $88,000, according to Yu.

Richmond-based NewMarket, parent company of Afton Chemical and Ethyl, had the lowest pay disparity of the Virginia companies surveyed, with a 24:1 CEO-worker pay ratio. Employees there made a median salary of $127,813 last year.

And Richmond-based leaf tobacco supplier Universal Corp. had the highest disparity, with a 3,083:1 pay ratio — likely due to the company’s heavy use of seasonal part-time laborers.

For his part, Gao doesn’t think CEOs are overpaid. After all, the median tenure of outgoing CEOs in 2024 was 6.7 years, according to Equilar data.

“The job is high risk, right?” Gao asks. “You don’t expect other people you know will step down from their work [or] lose their job” in five to six years.

Chances are also good that CEOs are toiling away many nights, weekends and even holidays. “They’re paid really, really well,” Gao says, “but they also work really hard.”