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Five CEOs Not Worth Their Salaries

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We’ve heard a lot recently about CEO pay. Executive pay is on still on the rise, even though the situation with the economy is uncertain. The outrage over huge compensation for financial and and other CEOs — and the non-binding votes on CEO pay by shareholders — barely made a dent in executive compensation.

Indeed, the median pay raise among CEOs for 2011 was 5%. Yes, the pay raise is smaller than it was the year before. But that doesn’t change the fact that CEOs make much, much more than their employees. And in some cases, there is question over whether or not they deserve.

It’s a nice thought that making the big decisions should come with a big paycheck. But, while Apple’s stock performance and revenue growth might justify the biggest CEO compensation package ever to Tim Cook, there are some CEOs who are presiding over serious issues in their companies. Some of the problems might not technically be their fault, but if you are receiving millions in compensation, you should bear some of the blame.

Here are 5 CEOs that might not be worth the millions they receive in various forms of compensation, based on 2010-2011 profits, and stock losses.

1. Michael S. Jeffries, Abercrombie & Fitch (ANF)

Michael JeffriesWith corporate profits down 16%, and the stock price down 7%, some think that $46.6 million a year in compensation might not be warranted. ANF’s stock is below $36 a share as of this writing — which isn’t very encouraging when you consider that the 52-week high is $77.73.

We’re talking about a guy that signed off on asking a Jersey Shore star not to wear its clothes, and watching the stock slide afterward.

2. Larry Ellison, Oracle (ORCL)

Larry EllisonLarry Ellison is one of the most well-known faces in the tech world. Technically, his salary is only $1 per year. However, his compensation is more than just that salary. He saw $14.8 million in cash bonuses during 2011, and $62.6 million in options. Not bad for such a small salary. And, while there was an increase in revenue (almost 33%) and net income (just over 39%) from 2010 to 2011, the stock price still plunged by 18.1%. When shareholders aren’t seeing the same value, does it make sense to compensate the CEO so richly?

3. Ian M. Cumming, Leucadia National (LUK)

During 2011, Cumming saw a pay raise of 555%. It was mostly in the form of stock options, but that is still a huge deal — especially when you consider that the stock loss for 2011 was 21%. So far, this year, LUK is closer to the 52-week low of $19.58 than it is to the 52-week high of $34.80. Corporate profits for LUK, a holding company with various interests, were down 99% in 2011. Cumming has been the CEO for Leucadia National for thirty four years and he’s currently 71 years old… he’s not familiar with the term “retirement.”

4. Lloyd Blankfein, Goldman Sachs (GS)

Lloyd BlankfeinWe all know that financial stocks have been struggling in recent years. However, their CEOs don’t seem to be sharing the same struggles. Even though Goldman saw corporate profits drop 67% in 2011, Blankfein enjoyed a 15% raise, and compensation of nearly $22 million. And, on top of that, the company presented plans to fire 1,000 employees (balancing it out by hiring 1,000 overseas). GS continues to languish in the $90′s, off from its 52-week high of $139.25.

5. Jamie Dimon, JP Morgan Chase (JPM)

Jamie DimonSeems a little unfair to pick on the CEOs of financial companies but when someone pulls down more than $40 million in total compensation in a year, one expects good decisions and oversight. But, we know that Dimon has a lot on his plate. If he can steer Chase through the London Whale debacle, and come out on top, his compensation might yet be justified. But, in 2011, JPM’s stock lost about 23%. JPM is down this year as well, and the current stock price of around $35 off the 52-week high of $46.49.

Do you think CEOs are overpaid? Who do think has been left off this list?

{ 11 comments, please add your thoughts now! }

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11 Responses to “Five CEOs Not Worth Their Salaries”

  1. freeby50 says:

    I don’t follow Oracle so I don’t know why their stock may have dropped. But if their revenue is up 33% and profits up 39% then I would say the company has done a very good job. And it would seem that Ellisons compensation is mostly stock / performance based so his income would depend on how well the company does.

  2. I personally think the majority of CEO’s are overcompensated, unless they founded the company and built it up from nothing. In that case I don’t care what they make.

    Larry Ellison of Oracle is the founder, so it doesn’t bother me he makes this much money – there is no Oracle without him.

  3. Courtney says:

    I wish I got a 5% raise last year :-(

  4. Ray says:

    Its tough to say really, being a CEO is a tough job. Your the face of a multimillion/billion dollar company. You have to manage it and keep it running.

    Every action you make must be carefully made. You have to balance the needs of your customers and your shareholders. And unless you own a majority position, you have no job security. A few bad years and your out.

    I know a lot of us would say we could do a better job for less, but ultimately shareholders are the ones who decide if a CEO should get a raise.

  5. Marcy says:

    Then there are those who have been out of work for over two or three years and cannot find a job in their field. Amazing!

  6. Jon says:

    Not to hurt anyone’s feelings or anything, and I mean no disrespect, as Miranda has written some thought provoking and helpful articles for our benefit, but what does this article have to do with the stated purpose of this website? As my family struggles to make ends meet, it would be much nicer to discuss things that will help us save and spend wisely, rather than editorializing on disparity of pay and other such issues that only divide.

    The truth is that no one should have a cap on how much money they can make in a free society, because the market should dictate what a person’s time is worth. I now bring home half as much money as I did before the recession, and I am okay with that, because my skillset is not as valuable to others as it was before the downturn. I am choosing to expand my skillset, and should start seeing more value to others in the form of higher compensation as a result of the efforts. Every person in a free society has that right. The greatest power a person has is the power to choose, and the shareholders of these corporations choose to pay their CEOs a great deal of money, whereas the CEO of Costco chooses to take $300,000 a year when the market is willing to pay more. Choices also have good or bad consequences, so if a corporation, which is made up of people (shareholders), pays too much to their people, their share prices suffer and/or the corporation goes under. This is their free choice, as it should be. Additionally, high income earners chose to hone their abilities, education, and talents to raise their value in the market, and they have for years sacrificed their nights, weekends, vacations, and often their personal lives to perform their duties. This is not a life that I choose, as my family means more to me than making lots of money, but to each their own.

    Choice is beautiful, and instead of imposing our personal judgments upon those making more money that I can imagine, may we all choose to respect the rights of shareholders to pay their people what they choose, while also choosing to increase the depth and breadth of our personal skillsets. That way, we can become people who will someday have others writing about how they believe that we make too much money. Now, if we may, let’s get back to Bargaineering!

  7. G. Howell says:

    In general I don’t invest in companies who’s CEOs have outlandish compensations. I will put my money elswhere.

    It pays to know where to go, as they say.

  8. tacra says:

    I must agree with Jon on this one. In a free society, we all get paid what we are able to negociate and those CEOs are no different. They have to negociate their compensation with the board of directors. To bring it up only serves to incite class warfare and that’s a war our society cannot afford to have.

    Now, I would make a few rule changes at the SEC about that. Mainly that no CEO may serve on any board of directors of any and I mean any company much less be chairman of the board. I think that is a comflict of interest.

    I’d also change an IRS rule and that is the cap on social security tax. Currently, all pay up too 106,000 is taxed at the 6 or so percent. Any money over the 106,000 cap isn’t taxed. That I believe is unfair and should be changed.

  9. darctones says:

    Why is it that people in business and finance make so much, while the engineers and designers make so much less?

  10. Mike says:

    I’m sure you can find examples of people who aren’t worth their salary in every profession.


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