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U.S. CEOs Call Fat City Home

Kmart had a good year in 1997, but for CEO Floyd Hall, it was a great year, reports CBS News Correspondent Richard Schlesinger.

Last year Hall was paid more than $8 million. In the meantime Kmart stock was up more than 10 percent, coming back from the brink of bankruptcy.

Hall's pay is a fraction Sanford Weill's. The CEO of Travellers got $230 million last year. The stockholders were delighted to give it to him, because he gave them an amazing 80 percent return on their money.

Nell Minow runs an investment fund and harangues CEO's that she feels are overpaid. She has spotted a costly trend; more executives are doing better for themselves than for their companies. Frequently, the bosses take millions, while leaving stockholders with nothing but excuses.

"The main thing about pay. . .is that when the company does well, it's always because of the CEO, says Minow. "When the company does badly it's always about El Nino or something like that. It's never about the CEO."

Multimillion dollar payouts attract criticism. But executive pay consultant Steven Hall says they also attract some talented people who earn their salaries.

"Being a CEO is a 7 day a week, 24 hour a day 52 week a year job," says Hall. "It isn't a job where you can turn around and say oops, it s 5:00, I have to go home and make sure I'm home for dinner. You just do whatever it takes to make it happen."

But what about CEO s who don't make it happen?

Ray Irani of Occidental Petroleum earned $100 million plus -- while his company lost $390 million.

Irani's story may not be all that unusual. In fact, Companies have many methods at their disposal to give their executives top pay regardless of the bottom line.

Some executives may be given options to buy company stock at a set price. If the stock goes up, they make a lot of money. But the executives can also be protected from falling stock prices - by lowering the price the company charges to buy out the executive's shares.

That way, even if the price goes down, the boss can still make millions.

The "Bottom line of options repricing is heads I win tails I still win," says Minow. "Does this subvert the entire purpose of the stock option grant. The answer is yes."

Reported by Richard Schlesinger
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