Based on recent reports, it appears that the current pay scales for some CEOs in Corporate America are way out of line. An excellent article on this subject appeared recently in USA Today. From all accounts, 2011 was the year of the $50-million-plus salary for CEOs. Huge employment contracts, retention deals, stock-option gains, bonuses and golden parachutes created huge windfalls for a number of CEOs. Even those on their way out because of improper conduct fared extremely well, which is difficult to understand. All of this comes at a time when a tremendous number of Americans are hurting with many of them being in very bad financial shape. Thousands have lost their jobs and their homes and others are simply having a hard time making ends meet.
A very good analysis of company filings with the Securities and Exchange Commission appeared in the USA Today article. The following is a list of CEOs who did very well last year:
• Walt Disney’s Robert Iger, whose 2011 compensation is valued at over $52 million. That includes $31.4 million in pay and perks and $21.4 million from stock options and vested shares.
• Apple’s Tim Cook — $378 million, including $376 million in restricted stock after replacing the late Steve Jobs.
• Qualcomm’s Paul Jacobs — $50.6 million, including $28.9 million from stock options.
• Tyco International’s Ed Breen — $68.9 million, including stock and option gains worth $52.4 million.
• J.C. Penney’s Ron Johnson — $51.5 million, including $50 million in restricted shares after signing on in November.
All of this comes at a time when executive pay has become a real sore point among rank-and-file workers. It has given rise to movements such as Occupy Wall Street. Corporate governance experts say most of these salaries aren’t warranted. It’s rather difficult to imagine any person making these sorts of salaries, especially in bad economic times.
It was reported that exit packages for the executives are even more lucrative. For example, Nabors Industries will pay Chairman Gene Isenberg $126 million when he steps down, while Motorola Mobility CEO Sanjay Jha and Temple-Inlad CEO Doyle Simons are due more than $60 million once merger deals are finalized.
I believe that publicly-held companies will have to deal with their shareholders on compensation packages for top-level executives more carefully in the future. In years past, annual meetings were generally of the dull sort, but I predict those days are over. Shareholders will start asking tough questions of those who decide how to pay corporate bosses and how much. They had best have some good answers.
Source: USA Today
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