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CEO pay climbs higher despite slow economy

fff

Well-known member
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 3½ percent pay increase for CEOs came even as the landscape for both workers and shareholders darkened considerably 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 AP 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 AP 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.

Look at total compensation
The AP’s formula, based on data from the past two years, adds 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 on the day they were granted last year.

That provides a clearer picture than pay totals required by the Securities and Exchange Commission, compensation experts say, because the SEC totals include expenses companies book during the year for previously granted stock compensation and retirement benefits.

The value of stock and options given to CEOs may turn out to be significantly higher or lower if they are ultimately cashed out, but the numbers in the AP formula do reflect the board of directors’ estimate of the likely eventual payout.

The median salary figure of about $8.4 million means half the CEOs in the AP 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 in the AP survey that had the same CEO two years running, about two-fifths lowered the total pay package for their CEOs. However, the primary culprit for some was falling stock prices that cut into the value of the 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 the posting a $39 billion loss in 2007, a year when its stock price fell by about 19 percent, without adjusting for dividends.

And Wagoner? His pay rose 64 percent, to $15.7 million
.

Pay for performance
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.

According to this concept, trotted out frequently by the compensation committees of corporate boards in their proxy statements, a big chunk of CEO pay is considered “at risk,” meaning it could disappear if CEOs don’t meet established metrics.

But the AP analysis found that CEO pay rose and fell regardless of the direction of a company’s stock price or profits.

Take KB Home, battered by the subprime lending crisis and the weak housing market. According to the Los Angeles-based homebuilder’s proxy statement, CEO Jeffrey Mezger is entitled to a cash bonus based on a percentage of KB’s profit.

The problem was there was no profit. KB Home lost almost $930 million in 2007 and its stock lost 60 percent of its value. But Mezger still made $24.4 million, as valued by the AP, including a $6 million cash bonus.

He pocketed that bonus because he exceeded certain objectives the board had set out for him. Among them were improving performance on a customer satisfaction survey and developing senior leadership in his first year as CEO.

“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 labor group representing government workers.

“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 in the financial industry last year — banks, investment firms, mortgage companies, insurers and other institutions, all were roiled by the subprime lending disaster.

For companies in the financial sector that had the same CEO two years in a row, median pay dropped 4¼ percent to $8.7 million in 2007. But that was still a smaller decline than the 6 percent drop in earnings and 15 percent slump in stock prices before dividend adjustments, according to Standard & Poor’s Capital IQ data service.

In some cases, companies appeared at first glance to have kept their promise to base pay on performance — only to have a different picture emerge on closer inspection.

Continued:

http://www.msnbc.msn.com/id/25106423/
 
A

Anonymous

Guest
Yep- the report I saw on TV the other day reported that the average CEO in the US now makes 400 times what their average employee makes :shock:

In comparison--That figure is only 11 to 1 in Germany and 10 to 1 in Japan...

A continuing growing dispartity between the haves and have nots- creating a decreasing middle class- increasing lower class----- and what will end up being the downfall of this country if it doesn't change.... :(
 

PrairieQueen

Well-known member
If they are going to continue to pay their CEO's that much then I guess they deserve to go out of business....

How can you have a company with only a CEO?
 

Larrry

Well-known member
If you would go down to the local homeless shelter I'll bet for 20,000 you could find many that would run these corps. Why not if its the money that you are worried about. Or is there something else other than cheap pay that you think these CEO's should deliver.
 

aplusmnt

Well-known member
fff........I say if you do not like the way a business pays its employee's at any level either do not work for them, or sell your stock as protest. If you either do not work for them or do not own stock in that company then mind your own business.

Or better yet, go to college get an education and go get you one of them high paying CEO jobs!

I kind of look at it like this, the CEO of General Motors is not concerned with the price fff sells her Bulls for, or the affect CAB has on the cattle market so why should fff worry about what the CEO of General Motors makes?
 

TSR

Well-known member
fff said:
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 3½ percent pay increase for CEOs came even as the landscape for both workers and shareholders darkened considerably 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 AP 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 AP 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.

Look at total compensation
The AP’s formula, based on data from the past two years, adds 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 on the day they were granted last year.

That provides a clearer picture than pay totals required by the Securities and Exchange Commission, compensation experts say, because the SEC totals include expenses companies book during the year for previously granted stock compensation and retirement benefits.

The value of stock and options given to CEOs may turn out to be significantly higher or lower if they are ultimately cashed out, but the numbers in the AP formula do reflect the board of directors’ estimate of the likely eventual payout.

The median salary figure of about $8.4 million means half the CEOs in the AP 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 in the AP survey that had the same CEO two years running, about two-fifths lowered the total pay package for their CEOs. However, the primary culprit for some was falling stock prices that cut into the value of the 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 the posting a $39 billion loss in 2007, a year when its stock price fell by about 19 percent, without adjusting for dividends.

And Wagoner? His pay rose 64 percent, to $15.7 million
.

Pay for performance
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.

According to this concept, trotted out frequently by the compensation committees of corporate boards in their proxy statements, a big chunk of CEO pay is considered “at risk,” meaning it could disappear if CEOs don’t meet established metrics.

But the AP analysis found that CEO pay rose and fell regardless of the direction of a company’s stock price or profits.

Take KB Home, battered by the subprime lending crisis and the weak housing market. According to the Los Angeles-based homebuilder’s proxy statement, CEO Jeffrey Mezger is entitled to a cash bonus based on a percentage of KB’s profit.

The problem was there was no profit. KB Home lost almost $930 million in 2007 and its stock lost 60 percent of its value. But Mezger still made $24.4 million, as valued by the AP, including a $6 million cash bonus.

He pocketed that bonus because he exceeded certain objectives the board had set out for him. Among them were improving performance on a customer satisfaction survey and developing senior leadership in his first year as CEO.

“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 labor group representing government workers.

“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 in the financial industry last year — banks, investment firms, mortgage companies, insurers and other institutions, all were roiled by the subprime lending disaster.

For companies in the financial sector that had the same CEO two years in a row, median pay dropped 4¼ percent to $8.7 million in 2007. But that was still a smaller decline than the 6 percent drop in earnings and 15 percent slump in stock prices before dividend adjustments, according to Standard & Poor’s Capital IQ data service.

In some cases, companies appeared at first glance to have kept their promise to base pay on performance — only to have a different picture emerge on closer inspection.

Continued:

http://www.msnbc.msn.com/id/25106423/


One day I hope the owners(stockholders) will get to have a say in the salaries of the top executives. What did I just say :???: :???: the actual owners having a say in what the top executives are geting paid.
You can bet these executives will do everything in their power to keep that from happening-thats a no brainer. In the mean time many just switch from company to company and keep getting those perks at the investors expense.
 

fff

Well-known member
aplusmnt said:
fff........I say if you do not like the way a business pays its employee's at any level either do not work for them, or sell your stock as protest. If you either do not work for them or do not own stock in that company then mind your own business.

What do you suggest that I reinvest the money I take out of GM into?

Or better yet, go to college get an education and go get you one of them high paying CEO jobs!

Doesn't address the fact that CEO pay is still going up while worker's pay and dividends for investors is going down. But don't you feel smart?

I kind of look at it like this, the CEO of General Motors is not concerned with the price fff sells her Bulls for, or the affect CAB has on the cattle market so why should fff worry about what the CEO of General Motors makes?

And I kind of look at it like this, the value of my investment in General Motors is going down, down, down and someone is responsible for that. It's not me. Would you, considering your stand on personal responsibility, possibly think the highly paid GM CEO might, just possibly, bear even the slightest, tiniest, responsibility for the decrease in the value of my GM stock? If so, should he get a pay raise to encourage him to continue to devalue my investment in the company or should he not get a pay rise?
 

fff

Well-known member
Larrry said:
Sell your GM stock is that a concept that is to hard to understand. Must be.

The stock is worth less than when I bought it. The bad decisions of GM CEO has cost me money. If I sell the stock, I may cut my losses, but I'm still out some money. Why should he continue to get raises when the value of stockholder's investment is going down? Stop telling me what to do with my money and tell me why this guy deserves a raise. Or admit that he shouldn't.
 

Larrry

Well-known member
I can see you now, your ship is sinking and you stay on board because you want to get the full value of your ticket.

You can cut your losses by selling GM, if you choose not to don't come whining to me.
 

aplusmnt

Well-known member
fff said:
aplusmnt said:
fff........I say if you do not like the way a business pays its employee's at any level either do not work for them, or sell your stock as protest. If you either do not work for them or do not own stock in that company then mind your own business.

What do you suggest that I reinvest the money I take out of GM into?

Or better yet, go to college get an education and go get you one of them high paying CEO jobs!

Doesn't address the fact that CEO pay is still going up while worker's pay and dividends for investors is going down. But don't you feel smart?

I kind of look at it like this, the CEO of General Motors is not concerned with the price fff sells her Bulls for, or the affect CAB has on the cattle market so why should fff worry about what the CEO of General Motors makes?

And I kind of look at it like this, the value of my investment in General Motors is going down, down, down and someone is responsible for that. It's not me. Would you, considering your stand on personal responsibility, possibly think the highly paid GM CEO might, just possibly, bear even the slightest, tiniest, responsibility for the decrease in the value of my GM stock? If so, should he get a pay raise to encourage him to continue to devalue my investment in the company or should he not get a pay rise?

If GM is doing bad then I would not give him a raise, but I do not own stock in GM and if I did I would sell it! (Except I think the Chevy Volt is taking them in right direction for once)

Bottom line is the CEO pay has very little to do with profit of a Billion Dollar company! Those big numbers just confuse you! If anything the average pay of its employees and benefits which has been way to high for many years had WAY MORE affect on GM's bottom line than the CEO wages do. You should be more concerned about firing research and development for not keeping up with the Quality in vehicles like Toyota has.

Some times you have to sell stock if it goes down, you can not buy something and expect it to make you rich. People sell and trade stocks all the time. Did I hang on to my KMart stock? No! The ship sunk and I moved on. If you do not understand this then it would probably be best you stay out of stock market! Put your money in a CD and quit worrying so much!
 

hopalong

Well-known member
fff said:
Larrry said:
Sell your GM stock is that a concept that is to hard to understand. Must be.

The stock is worth less than when I bought it. The bad decisions of GM CEO has cost me money. If I sell the stock, I may cut my losses, but I'm still out some money. Why should he continue to get raises when the value of stockholder's investment is going down? Stop telling me what to do with my money and tell me why this guy deserves a raise. Or admit that he shouldn't.

Who's fault is it that you made a bad decision to buy GM stock??
Suppose everyone that has bought stock that lost them money has your attituide, but the who expects anyone who is so wrapped into the deceit that cab spouts to have any kind of a sensible outlook at anything!!
Too bad you are not able to LOCK this discussion like you do in cattle today, :roll:
 

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