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Five CEOs Not Worth Their Salaries

Posted By Miranda Marquit On 08/02/2012 @ 12:06 pm In Personal Finance | 11 Comments

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% [3]. 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 [4])

With 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 [5])

Larry 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 [6])

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 [7])

We 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 [8])

Seems 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?


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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/ceos-worth-salaries.html

[3] median pay raise among CEOs for 2011 was 5%: http://www.nytimes.com/2012/06/17/business/executive-pay-still-climbing-despite-a-shareholder-din.html?_r=2&pagewanted=all

[4] ANF: https://www.google.com/finance?client=ob&q=NYSE:ANF

[5] ORCL: https://www.google.com/finance?client=ob&q=NYSE:ORCL

[6] LUK: https://www.google.com/finance?client=ob&q=NYSE:LUK

[7] GS: https://www.google.com/finance?client=ob&q=NYSE:GS

[8] JPM: https://www.google.com/finance?client=ob&q=NYSE:JPM

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