Here’s another article on the outrageous pay given to CEOs even when their performance is subpar. Last year, there were five specific offenders singled out. Today, there are five different companies, and drugs are on top:
* The CEO of Pfizer, Henry McKinnell, made more than an average of $15.5 million a year while the company’s shareholders lost 35% over the past five years. His pension is worth $83 million.
* Merck‘s shareholders lost 41% in the past five years while former chief executive Raymond Gilmartin totalled $54 million including his company stock as he cashed it out.
* Edward Whitacre was the chairman and CEO of SBC and now AT&T. He earned $85 over the past five years, and will earn millions more in consulting fees and pension from the company after he retires. In those five years, shareholders have lost 40%.
* Shareholders in Bell South lost 23% while its chairman and CEO F. Duane Ackerman made $46 million.
* Safeway‘s CEO Burd earned $52 million in the past five years. His company’s stock has plunged 54% in the same time frame.
If there’s any good news in this, it’s that after five years of decline, now that I’ve invested $50 in a telecommunications ETF, perhaps the sector will start climbing upwards. Drug companies are everywhere in my index funds. But seriously, CEOs are supposed to increase the company’s value for shareholders. These guys should be fired, not rewarded.
The only other possibility I can think of is similar to the movie The Hudsucker Proxy, in which a board of directors installs who they think is a moron to the post of CEO in an attempt to drive down the stock price to a point where the board can snatch it up and later return the company to its former glory. These CEOs must be getting paid well for playing their part in the grand scheme.
Published or updated April 26, 2006.