Originally published September 4 2005
CEOs are being overpaid while the company suffers, MSN reports
by Mike Adams, the Health Ranger, NaturalNews Editor
MSN Money recently took a look at the worst-performing stocks in the S&P over the past several years, and then looked at the CEOs with the fattest compensation packages, and found the two most often go hand-in-hand.
Although stockholders sued, the one-time Hollywood superagent gets to keep the $140 million he was paid for 14 months of work as president at Walt Disney (DIS, news, msgs).
We scoured corporate regulatory filings and found plenty of examples of overpaid underachievers in executive suites.
Ultimately, we came up with a list of the five most overpaid bad chief executives, and another of the five most underpaid good execs.
Fat pay, thin performance Rather than focus on single-year offenders, we rounded up -- with help from Standard & Poor's -- the worst performing stocks in the S&P 1,500 over the past several years.
Then we looked for the CEOs with the fattest compensation packages -- including base pay, stock grants and the value of options awarded the chiefs, as calculated using the Black-Scholes model, a common tool for valuing options.
The worst offenders The upshot: Some boards award breathtakingly large pay packages to CEOs even as the executives trash their shareholders' investments.
"I feel nothing but contempt," says Don Hodges, president of the Hodges Fund (HDPMX).
"They pay themselves like they are rock stars."
Particularly irksome to Paul Hodgson, an analyst at the Corporate Library, an independent research firm that provides corporate governance analysis, was the bonus paid by Sanmina-SCI.
Hodgson's complaint: Performance pay should reward long-term results.
But the Sanmina-SCI board handed out a huge bonus just because of good results in one recent quarter -- even as long-term investors suffered.
He points out that Sun Microsystems' McNealy, for example, earns 32 times President Bush's annual $400,000 salary.
But a few companies on our list get weak to lousy grades for corporate governance.
Unfortunately, all but Bristol-Myers declined to talk with us.
The corporate governance watchdogs at ISS agree.
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