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Even Lousy CEOs Get Great Pay

This article was written by in Salaries. 2 comments.


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. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

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{ 2 comments… read them below or add one }

avatar jim

And if they keep it up, they can get the ultimate in paydays… severence.

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avatar Tim MMF

I might have to pick up an MBA along the way…

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