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Who determines, and how, the composition of the S&P 500 index?
The S&P 500 index is maintained by S&P Dow Jones Indices, a division of McGraw Hill Financial. Changes to the index are made periodically, as needed.  For Facebook, you'll find it mentioned in this December 11, 2013 press release (PDF).  Quote: New York, NY, December 11 , 2013 – S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500, MidCap 400   and S&P SmallCap 600 indices after the close of trading on Friday,   December 20: You can find out more about the S&P 500 index eligibility criteria from the S&P U.S. Indices methodology document (PDF).  See pages 5 and 6: Market Capitalization - [...] Liquidity - [...] Domicile - [...] Public Float - [...] Sector Classification - [...] Financial Viability - Usually measured as four consecutive quarters of positive as   reported earnings. [...] Treatment of IPOs - Initial public offerings should be seasoned for 6 to 12 months   before being considered for addition to an index. Eligible Securities - [...]   [...]   Changes to the U.S. indices other than the TMIX are made as needed,   with no annual or  semi-annual reconstitution. [...] LabCorp may have a smaller market cap than Facebook, but Facebook didn't meet all of the eligibility criteria – for instance, see the above note about "Treatment of IPOs" – until recently. Note also that "Initial public offerings should be seasoned for 6 to 12 months" implies somebody at S&P makes a decision as to the exact when. As such, I would say, no, there is no "simple rule or formula", just the methodology above as applied by the decision-makers at S&P.