It Pays (A Lot) To Be A CEO

Half Of America's Top Executives Make More Than $8.3M A Year

(AP)  No matter which formula you use, Yahoo CEO Semel's total illustrates one of the most pronounced recent trends in executive pay: Salary and cash bonuses account for only a small portion of total compensation. Almost all of his pay — $71.4 million — came as stock grants and stock options, according to AP calculations. His salary totaled only $250,001.

Plus, the eventual payouts from stock options handed to CEOs could be substantially higher in future years if the overall market keeps floating most stock boats higher.

It wasn't supposed to turn out this way.

This was expected to be the year that investor anger over pay boiled over. After Home Depot Inc.'s Robert Nardelli and Pfizer Inc.'s Henry A. McKinnell left their battered companies with golden parachutes worth $210 million and nearly $200 million, respectively, shareholder activists entered proxy season this spring primed for a showdown on pay and outsized retirement packages. It didn't happen.

Most annual meetings were quiet affairs. Shareholders did win votes giving them a say in executive compensation at Verizon Communications Inc., Blockbuster Inc. and Motorola Inc.

But mutual funds largely backed companies in voting against the initiatives, a poor portent for their future success at slowing the growth of executive compensation.

A recent report by the Congressional Research Service helps to put the executive pay issue into a real-world context. CEOs make, on average, 179 times as much as rank and file workers, double the 90-to-1 ratio in 1994, according to the agency's calculations.

If the minimum wage had risen at the same pace as CEO pay since 1990, it would be worth $22.61 today, according to the Institute for Policy Studies. Instead, the federal minimum wage will increase to $5.85 an hour on July 24, the first increase in a decade.

CEOs are also much richer than lower-level executives at their own companies. The Hay Group, a compensation consulting company, estimates that the average CEO makes 2.5 times more than the average executive in base pay.

The SEC's new disclosure rules also mandate narratives, in plain English, explaining how pay decisions are reached. But a study of the disclosures by Clarity Communications found that most failed to meet readability standards many states require for insurance forms.

"Why is it that a CEO gets compensated in such a discombobulating fashion when the average worker gets a paycheck and can tell immediately what it's about? ... If you're an investor and you get your (proxy) statement and it just goes on for pages and pages of the different methods used to pay the CEO, at some point you have to ask yourself why. 'Why don't I get all this?"' said Dominic Jones, Clarity's president.

Still, if the process around pay is inching its way toward something that looks more democratic, executive pay may be one area where gravity doesn't apply.

Said John Wilcox, head of corporate governance at retirement system TIAA-CREF, which manages more than $410 billion: "Once it's up there, it's very hard to pull it down again."

[itgranny]

Capitalism has one major flaw. In theory it works right up until you factor in the greed of the people in charge. The money accumulates at the top and doesn't trickle down as its supposed to.

[evq123]

What is most amazing about this is that Yahoo is not getting good results recently, their stock is very low and their sales are going down.

Because of this, I really don't understand why the CEO of Yahoo is getting a lot of money, if he is not doing correctly his job.

This amount of money can be given to CEOs of Google, Apple, and other companies that are really doing very good their job.

For example Steve Jobs is doing amazing work at apple, he is a man that really deserves to receive payments like this ones.

[hypnotoad72]

acauble1 - I think the dream is dying, or considering how people have been told over time how new fields would show up for US workers, or the varying excuses made for opening up more H1Bs, and so on, never mind the obvious bit about how making America competitive in a global world means making the cost of living to match the cost of living in India and China, which is why the wages being offered to their countries is a godsend while it's kinda difficult to live on them here.

Why aren't there answers? It is NOT about retraining because other news articles are saying how it costs ____ less to do it in ____. They're avoiding the core problem: Cost of living in America, along with the wages, is why America is losing its competitive edge. If anybody is truly being serious about wanting to make America competitive in a global environment, then it's d@mningly obvious what has to be done: Equalize the costs. Until then, who is going to spend a large 5 figure loan (or more) for education to get a job that pays a smaller 5 figure income that would likely be offshored because it could be done in a cheaper country anyway?

Something isn't adding up. President Bush isn't responsible, but even he knows "retraining" isn't the solution. More and more types of jobs are seen as being able to be offshored. It hasn't happened yet but it's going to if the CORE problems don't get fixed. And that's what President Bush CAN do.

[jvman4u]

...and often we "the little people: pay more taxes, and pay again with low wages and poor hygiene work environments and little to no support personnel. Just forget it people, there is NO AMERICAN DREAM anymore unless you are: 1. in another country 2. here illegally 3. Paris Hilton....

[acauble1]

The "FREE MARKET" has cost, and will continue to cost this country BILLIONS OF DOLLARS....

...in trade deficits

...in health care costs

...in job losses for both skilled and un-skilled laborers

...in energy costs

...and most of all, the long term health of this planet's environment that will have to be suffered by this generation's children, grand children, and beyond (for those who care, which is sadly too few).

The biggest oxymoron in the english language today:

FREE MARKET

[l8c6]

I hate to tell you Standlee5 but that is what happens in a free market. Posted by bloggerbud at 09:23 PM : Jun 09, 2007

This is perverted rhetoric. So how about free football games, no rules, let's watch the players literlly stab each other in the backs, spill some blood, spray bullets on the field to score a touchdown then. Hell let the sociopaths run amock because it is them who "win" in this "free" market society.

[standlee5]

Posted by janem4 at 10:20 PM : Jun 09, 2007


Jane, I wouldn't give a rat's azz how much they made if I knew they weren't raping a pillaging, gutting pension plans, hiring illegal labor, taking companies into bankruptcy to scr*w creditors, feeing consumers to death and union busting. They've not proven themselves to be fair to the American worker many of whom have built and whose families have built the very companies they're ravaging.

[standlee5]

I hate to tell you Standlee5 but that is what happens in a free market. Posted by bloggerbud at 09:23 PM : Jun 09, 2007

No, that's what happens in a de-regulated, profit at any cost, demoralized, illegal, govt. approved,greedy free for all.

[hypnotoad72]

standlee5 - with the rise of big box stores that also happen to do services, look at things from a customer's perspective: Supporting a local store that's gonna cost money, or going to the big box brand who has the name and presence and can charge less because they have numerous locations throughout the nation and therefore has the power to set prices? Regardless of the quality of the service or product, we both know people will go to the entity that costs less.

The sad part is, the big fish can eat all the little ones. It then has to eat itself in the end after all the little ones are nothing left than disintegrated bones. It's not a very bright way to run a society, but nothing's perfect... Once big biz is done with us, and decades down the road when they take a leak on India's and China's populations as well, hopefully we'll be intergalactic so we can go offshore to Calufrax...

[standlee5]

Every day for these guys is hell. Posted by bloggerbud at 09:23 PM : Jun 09, 2007

Oh gee, boo frigging hoo, at over a mil. a week I think they can handle it.

[standlee5]

Posted by bloggerbud at 09:23 PM : Jun 09, 2007

Fine, then they can take their stressed out azzes and their American worker backbreaking corps. and move tehm to India. S.c.r.e.w. them. We will fill the void with our own small businesses. F.them and F. people like you who care not about the avg. American.

[hypnotoad72]

bloggerbud - it is not competition when their local economies make the wages offered by America's corporations a goldmine. To them. The same wages, to Americans, is not quite so good. Because our cost of living is more.

And another reason why it's not competition: It's migration.

Indeed, for all the whining people make over Dell's bad product quality, Apple's awful India helpdesk support and numerous other examples, the jobs aren't coming back here where we (had) competent personnel.

Until America's local economy is globalized to match India's and China's, I just cannot believe we're competing with anybody. It's about greed.

One other thing - Michigan's cars. Is it solely the assembly that's awful? Or the PARTS? Where do the parts come from? China? I wish it was as simply as bashing the USA so readily. It isn't.

winnerindia - Gates was also arrested in 1977 for a charge that has since been "lost". Funny, that... And he's shrewd. In a business sense.

[jw218389]

I don't have health insurance and you made 71 MM Dollars in ONE YEAR???!!

Screw you ***!!!!!!!

[bloggerbud]

Afinefolly...

What?

[afinefolly]

hmm, i wonder: k, consider a $300,000 3000 sq ft home on a 3/4 acre lot and replace with 14 340 square foot cottages for $60,000 each: the $300,000 3000sf home is now a $840,000 4700sf home. now, give those homes to customers or other folk, as if it were free email or a free web page: to attract customers who make a living canvasing area neighborhoods online and offline for the purpose of shopgifting not just yahoo, but yahoo's competition as well: in order to assist all parties by holding hands / weaving bouquets / song dance skit kit get well soon, you are here, why why why / recycling grass and dirt to educational props with accents, dances with jingles, arts and crafts, knicks and knacks / shopgifitng grass and dirt for cures for cancer and other margaritas ... when the market is healthy, the competition is healthy, and the entity is unavoidably healthy?

[bloggerbud]

I hate to tell you Standlee5 but that is what happens in a free market. Unfortunately we are not the USA all alone anymore. We have to compete with all those Asian countries that have cheap labor. CEO's do what is expected by their shreholders. If a company isn't competitive their stock plunges, if the stock plunges their worth plunges, if their worth plunges they can't afford to keep large payrolls. It is a vicious cycle. If CEO A doesn't do all the stuff you say, then CEO B will. It is a sad fact of how the economic playing field is leveling all over the world.

Look at Detroit. They make shi**y cars. They charge too much. They have Unions that gouge their own workers and pass the high prices on to consumers that, in turn, say Bite Me, and buy Japanese. It is not the CEOs Pal, they don't operate in a vacuum. The CEO answers to a Board and too the shareholders. If you want to vent, vent on them. At least get the right target in your crosshairs.

If you don't like credit card fees then don't use the card. If you can't afford that big screen TV, that fishing boat and that new pick-up, hey, maybe you shouldn't buy it.

I doubt they'll rot in hell. Every day for these guys is hell. A million problems all day long. Have you ever heard the expression, "you couldn't pay me enough..."? Try managing even 5 people - what a nightmare. Especially 5 folks like you with an ax to grind.

[winnerindia]

For one to be competent, formal education is not needed. Bill Gates was kicked out of the university.

[omega39-2009]

Have you even been an executive, taken an MBA class, bought a stock, read the Journal?...

Oh please, need I remind you that Bush has an MBA and is a former CEO, and we all know how his presidency has turned out.

[standlee5]

Have you even been an executive, taken an MBA class, bought a stock, read the Journal?Posted by bloggerbud at 09:08 PM : Jun 09, 2007

No. No. Yes. Yes. Why?

[standlee5]

When they're charging fees left and right. Anything they can get away with in this de-regulated enviromnment. They get us coming and going on creditcard/bank fees, refi's, processing fees, you name it. Gutting pension plans and firing employees, replacing them with Hb1 visa workers, that's what these guys get paid the mega bucks for, scr*wing the public. That's what it's all about. Not one single solitary scruple in their being. So maybe they deserve their wealth because they'll spend eternity rotting in h*ll.