Post by Jaga on Jun 17, 2008 15:57:52 GMT -7
This information from AP was all over news today. Don't you think that there should be some relationship between a CEO pay and the company success? Besides, who is worth 10 millions and more per years?
I do not believe that any single person can justify such a payment.
CEO pay chugged up in 2007 despite sagging economy and profits
NEW YORK — As the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year, an Associated Press analysis shows.
The AP review of compensation for the heads of companies in the Standard & Poor's 500 index finds the median pay package added up to nearly $8.4 million. That's a comfortable gain of about $280,000 from 2006.
The 3 1/2 per cent pay increase for CEOs came even as the landscape for both workers and shareholders darkened and the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food.
At the top of the list: John Thain, who took the reins of Merrill Lynch on Dec. 1, 2007. His $83-million pay package was supercharged by a signing bonus and other enticements that lured him from the New York Stock Exchange to lead the investment bank as it was suffering its worst-ever losses.
Collectively, the 10 best-paid CEOs made more than half a billion dollars last year. Yet half the members of this stratospheric club were leading companies whose profits shrank dramatically.
The examination of CEO pay in 2007 mined data from the 410 companies in the S&P 500 that filed compensation disclosures with federal regulators in the first six months of this year, tallying up salary, perks, bonuses, above-market interest on pay set aside for later, and company estimates for the value of stock options and stock awards.
The median total pay figure of about $8.4 million means half the CEOs in the analysis made more than that and half made less.
There were some signs companies were pulling back on pay at the top: Out of the 316 companies that had the same CEO two years running, about two-fifths lowered the total pay package for their CEOs. However, the primary reason for this was falling stock prices that cut into the value of shares included in pay packages.
In many more cases, overall pay ballooned.
Rick Wagoner, chief executive of General Motors Corp., announced earlier this month the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed a $39 billion loss in 2007, a year when its stock price fell by about 19 per cent.
And Wagoner? His pay rose 64 per cent, to $15.7 million.
Last year was rocky for the economy and the stock market, making it a useful test of a concept called pay for performance - a term companies use to sell shareholders on the idea CEOs are being paid based on how well the company does.
But the AP analysis found that CEO pay rose and fell regardless of the direction of a company's stock price or profits.
"Compensation has become a shell game," said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees, a Washington labour group.
"So they take away the bonus," he said, "but then they still come up with ways to make sure the executive gets a big payout."
Pay packages were somewhat smaller last year in the financial industry, roiled by the subprime lending disaster.
For companies in the sector that had the same CEO two years in a row, median pay dropped 4 1/4 per cent to $8.7 million in 2007. But that was a smaller decline than the six per cent drop in earnings and 15 per cent slump in stock prices.
Meanwhile, in the booming energy industry, CEOs in the AP survey chalked up a median 32 per cent gain in 2007. It's no secret that profits at oil and gas companies have raced higher, but this has less to do with executive skill than with the price of oil.
"The issue of an escalated price of oil shouldn't flow back in to executives' wallets, but to shareholders in the form of higher dividends," said activist investor Gerald Armstrong of Denver.
When outside factors help the bottom line, CEOs tend to benefit personally, but the opposite is not generally true, said Bill Coleman, chief compensation officer for Salary.com, which provides corporate pay information.
"How convenient," he said. "I take credit for everything good and I blame external factors for anything bad, but say that shouldn't affect my pay."
There were examples of companies that really did cut back on pay during a bad year.
Department store operator Dillard's Inc., plagued by falling sales, profits and stock value, cut CEO William Dillard's pay package by two-thirds, to $1.1 million.
canadianpress.google.com/article/ALeqM5gLRTFUGxbvApfmeml3tiMWW5Ii0w
I do not believe that any single person can justify such a payment.
CEO pay chugged up in 2007 despite sagging economy and profits
NEW YORK — As the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year, an Associated Press analysis shows.
The AP review of compensation for the heads of companies in the Standard & Poor's 500 index finds the median pay package added up to nearly $8.4 million. That's a comfortable gain of about $280,000 from 2006.
The 3 1/2 per cent pay increase for CEOs came even as the landscape for both workers and shareholders darkened and the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food.
At the top of the list: John Thain, who took the reins of Merrill Lynch on Dec. 1, 2007. His $83-million pay package was supercharged by a signing bonus and other enticements that lured him from the New York Stock Exchange to lead the investment bank as it was suffering its worst-ever losses.
Collectively, the 10 best-paid CEOs made more than half a billion dollars last year. Yet half the members of this stratospheric club were leading companies whose profits shrank dramatically.
The examination of CEO pay in 2007 mined data from the 410 companies in the S&P 500 that filed compensation disclosures with federal regulators in the first six months of this year, tallying up salary, perks, bonuses, above-market interest on pay set aside for later, and company estimates for the value of stock options and stock awards.
The median total pay figure of about $8.4 million means half the CEOs in the analysis made more than that and half made less.
There were some signs companies were pulling back on pay at the top: Out of the 316 companies that had the same CEO two years running, about two-fifths lowered the total pay package for their CEOs. However, the primary reason for this was falling stock prices that cut into the value of shares included in pay packages.
In many more cases, overall pay ballooned.
Rick Wagoner, chief executive of General Motors Corp., announced earlier this month the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed a $39 billion loss in 2007, a year when its stock price fell by about 19 per cent.
And Wagoner? His pay rose 64 per cent, to $15.7 million.
Last year was rocky for the economy and the stock market, making it a useful test of a concept called pay for performance - a term companies use to sell shareholders on the idea CEOs are being paid based on how well the company does.
But the AP analysis found that CEO pay rose and fell regardless of the direction of a company's stock price or profits.
"Compensation has become a shell game," said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees, a Washington labour group.
"So they take away the bonus," he said, "but then they still come up with ways to make sure the executive gets a big payout."
Pay packages were somewhat smaller last year in the financial industry, roiled by the subprime lending disaster.
For companies in the sector that had the same CEO two years in a row, median pay dropped 4 1/4 per cent to $8.7 million in 2007. But that was a smaller decline than the six per cent drop in earnings and 15 per cent slump in stock prices.
Meanwhile, in the booming energy industry, CEOs in the AP survey chalked up a median 32 per cent gain in 2007. It's no secret that profits at oil and gas companies have raced higher, but this has less to do with executive skill than with the price of oil.
"The issue of an escalated price of oil shouldn't flow back in to executives' wallets, but to shareholders in the form of higher dividends," said activist investor Gerald Armstrong of Denver.
When outside factors help the bottom line, CEOs tend to benefit personally, but the opposite is not generally true, said Bill Coleman, chief compensation officer for Salary.com, which provides corporate pay information.
"How convenient," he said. "I take credit for everything good and I blame external factors for anything bad, but say that shouldn't affect my pay."
There were examples of companies that really did cut back on pay during a bad year.
Department store operator Dillard's Inc., plagued by falling sales, profits and stock value, cut CEO William Dillard's pay package by two-thirds, to $1.1 million.
canadianpress.google.com/article/ALeqM5gLRTFUGxbvApfmeml3tiMWW5Ii0w
