I came across a great article in Bloomberg on CEO pay.
Graef Crystal, a pioneer in compensation consulting, analyzed 2009 CEO pay of 271 executives and found that "companies don't pay for performance." Crystal found that no matter how he analyzed the data the results were always the same: there is no correlation between CEO compensation and shareholder returns.
In Crystal's analysis, he created a "fair pay" model that redistributed the $2.7B aggregate payroll of all the CEO's according to each company's shareholder return, adjusted for company size. Under this model, Lesile Moonves would have taken a$28M pay cut and Google's Eric Schmidt would have seen an increase to $17.4M.
10 Most Overpaid CEO's:
1. Leslie Moonves: CBS, $43.2M
2. Phillipe Dauman: Viacom, $34M
3. Ray Irani: Occidental Petroleum, $31.4M
4. William Weldon: Johnson & Johnson, $30.8M
5. Thomas Ryan: CVS Caremark, $30.4M
6. Glen Senk: Urban Outfitters, $29.9M
7. Randall Stephenson, AT&T, $29.2M
8. James Hackett: Anadarko Petroleum, $27.5M
9. Brian Roberts: Comcast, $27.2M
10. Rex Tillerson: ExxonMobil, $27.1M
10 Most Underpaid CEO's:
1. Vikram Pandit: Citigroup, $128,751
2. Eric Schmidt: Google, $245,322
3. Donald Graham: The Washington Post, $472,997
4. Lloyd Blankfien: Goldman Sachs, $934,425
5. Willard Oberton: Fastenal, $945,092
6. Douglas Berthiaume: Waters Corp, $1,010,393
7. Ian Cumming: Leucadia National, $1,011,850
8. Jamie Dimon: JP Morgan Chase, $1,322,094
9. Harris Simmons: Zions Bancorp, $1,373,352
10. Gary Kelly:Southwest Airlines, $1,559,431
Graef Crystal's breakdown between CEO pay vs. shareholder returns:
Overpaid CEO's vs. Shareholder Return:
Frank Baldino Jr: Cephalon, $11.15M pay vs. -19% return
Paul Evanson: Allegheny Energy, $12.59M pay vs. -28.9% return
Antonio Perez: eastman Kodak, $12.63M pay vs. -35.9% return
Brian Roberts: Comcast, $27.2M pay vs. 1.7% return
Rex Tillerson: ExxonMobil, $27.1M pay vs. -12.6% return
Underpaid CEO's vs. Shareholder Return:
John Mack: Morgan Stanley, $1.92M pay vs. 87.9% return
Jeff Bezos: Amazon, $1.78M pay vs. 162.3% return
Jamie Dimon: JP Morgan Chase, $1.3M pay vs. 34.4% return
Lloyd Blankfein: Goldman Sachs, $934K pay vs. 102.5% return
Eric Schmidt: Google, $245K pay vs. 101.5% return
Original Authors: Jessica Silver-Greenberg and Alexis Leondis
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