What is a Fortune 500 company? The story behind the list

The Fortune 500 list is the ultimate measure of success for U.S. companies and Fortune’s flagship ranking.

In a letter proposing the business magazine to advertisers in 1929, Time founder Henry Luce envisioned the publication as a way to “reflect Industrial Life in ink and paper and word and picture, as the finest skyscraper reflects it in stone and steel and architectural design.”

Created over three decades after Fortune’s birth, the Fortune 500 was first a shot-in-the-dark idea by a journalist hoping to elucidate the world of business to a wider audience. The list is now the benchmark for companies around the world and a consistent metric with which to assess the country’s economic health.

With the release of the 2024 Fortune 500 right around the corner, here are the basics on Fortune’s flagship list.

What is a Fortune 500 company?

Simply put, the Fortune 500 is a list of the largest 500 U.S. companies, public and private, ranked based on revenue.

Investors use the list to track the rise and fall of American companies and make conclusions about the country’s economic health, and companies use it as a way to assess its growth and competitive edge from year to year. For academics, industry professionals, and business leaders, the Fortune 500 is a way to learn which businesses and industries are rising.

How do companies get on the Fortune 500?

Not all companies are eligible for the Fortune 500. Those eligible include incorporated and operated in the U.S. which file financial statements with a government agency, such as publicly listed companies, and private companies that file with a government agency. Companies incorporated outside the U.S. are not eligible for the list, nor are private companies that don’t file through government agencies.

For companies meeting this criteria, there’s a challenge to be eligible for the list. Every year, Fortune sets a revenue threshold for companies to meet to be considered for the list. In 2022, all listees had to have made at least $7.24 billion in revenue.

When will the new Fortune 500 list come out?

The Fortune 500 will be released online on June 4, 2024. You can find the 2023 list here.

When did the Fortune 500 launch?

Fortune’s Assistant Managing Editor Edgar P. Smith launched the list in 1955, when Fortune was under Time’s umbrella. It had an early moniker of the “Annual Directory of the 500 Largest Corporations.”

In the mid-1950s, the U.S. economy was booming, but after decades of economic strife—including the Great Depression and the economic fallout of two world wars—companies were slow to show any optimism, a Fortune story from 1995 recalled.

Despite the explosion of thriving businesses, the success of these companies were poorly documented, Loomis wrote. Fortune began compiling a list of the largest U.S. companies for its internal use, but Smith had another idea: “I think that our readers just might be interested in this list," he said.

Compiling the list was a slog for Fortune’s staff. After it was released to the public, the attitude towards the Fortune 500 shifted. It was a “box-office smash, no question.” The list became the touchstone for tracking U.S. businesses and their rippling impact.

“In its entirety, the 500 has been a wide window on the U.S. economy and a reference point for all,” the Fortune story said. “It has been cited by Presidents and Congressmen, dissected by economists, and viewed by business leaders—still yearning for normality and never quite finding it—as the Bunyanesque yardstick of industrial progress.”

How much has the Fortune 500 changed over 70 years?

In 1955, General Motors topped the Fortune 500, reporting over $9.8 billion in revenue and $806 million in profits. It’s stayed on the list every year since— last year, it sat at No. 21. Other companies in the original top 10 include U.S. Steel, General Electric, Chrysler, Armour, Gulf Oil, Mobil and DuPont.

Companies such as GM and Mobil—which merged with Exxon in 1999 and ranks No. 3 on 2023’s list—have held their ground on the list for decades. Over 1,800 companies have been listees over the Fortune 500’s 70 years.

Today, e-commerce and retail giants top the Fortune 500, with Walmart holding the top spot, where it’s been for 11 years. Amazon had been Walmart’s runner-up four years in a row.

In 1995, Walmart—first opened in 1962—was the rookie with the highest ranking on the 500, coming in at No. 4.

Today’s Fortune 500 companies are also making more than the $9.8 billion GM reported in 1955. GM made nearly $172 billion in revenue in 2023, and Walmart reported $611 billion in 2023 revenue.

In 2023, the Fortune 500 companies had their highest ever combined revenue of $18.1 trillion, with the top 10 firms earning over $3.7 trillion, or about 20% of the list’s total revenue.

Who else has been on the list every year?

A cadre of fewer than 50 companies have graced the list every year since the beginning. Besides GM and ExxonMobil, they include pharmaceutical giants such as Pfizer and Merck, as well as familiar food and drink brands like PepsiCo, Coca-Cola, Kraft Heinz, and General Mills.

Who were the 2023 Fortune 500 freshmen?

On the other end of the spectrum, the Fortune 500 saw some fresh faces, including Airbnb and Lululemon. In total, the 15 new companies joining the list made $146.2 billion in revenue and had an average growth rate of over 50%.

Skechers, ServiceNow, EQT, and Coupang were among the list’s other newbies.

Have CEOs leading Fortune 500 companies gotten more diverse?

For the first twenty years of the list’s existence, the CEOs representing the Fortune 500 companies were demographically homogeneous. That began to change in 1972, when Katharine Graham became CEO of the Washington Post, and subsequently the first woman CEO of a Fortune 500 company. Fifteen years later, Clifton Wharton became the first Black CEO of a Fortune 500 company after taking over at TIAA. Former Xerox CEO Ursula Burns became the first Black woman to helm a Fortune 500 company in 2009.

Last year marked the first time that women made up over 10% of CEOs of the country’s most powerful companies, with 52 companies of the 500 run by women.

While the Fortune 500 had its near-record high percentage of Black CEOs last year, making up eight of the list’s 500 companies, that’s still only 1.6% of the listees.

Executives agree that there’s not a quick fix to building diversity among the highest ranks of these companies, with few people of color in management tracks.

“The tracks that lead to the CEO jobs are primarily P&Ls,” Michael Hyter, chief diversity officer at consulting firm Korn Ferry, said in 2021. “There are a lot of people of color in support roles [accounting, marketing]—lots. That’s not what gets you into the CEO job.”

What other lists does Fortune have?

Since the introduction of the Fortune 500, Fortune has introduced additional lists to accommodate the growth of businesses worldwide. Fortune 500 China and the Global 500 celebrate the biggest companies in China and across the world, respectively.

Others, such as the Most Powerful Women list and 40 Under 40 honor individuals separating themselves from the pack.

Find all of Fortune’s rankings here.

Which U.S. state has the most Fortune 500 companies?

For the second year in a row, Texas has the most Fortune 500 companies of any other state. Home to ExxonMobil and pharmaceutical manufacturer McKesson, the state’s Fortune 500 listees racked up 26% of the list’s revenue,  totalling $2.6 trillion.

The Lone Star State has become popular among CEOs for its low cost of living and lack of corporate or individual state income tax.

States such as Wyoming and Montana are home to zero Fortune 500 companies.

This story was originally featured on Fortune.com