Feeding at the executive trough
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Feeding at the executive trough
BOB MOON: By any measure, this was a great year for chief execs. Wanna take a guess how the average CEO’s pay stacks up next to the average worker? Try 369 times as much. This year, CEO pay went up 16 percent, on top of a 30 percent jump last year. Commentator Nell Minow has a name for all that: feeding at the executive trough.
NELL MINOW:Everything I know about CEO compensation, I learned from my mother.
My mother always told me that it was good to share. That’s how I know that there’s something wrong with Barry Diller’s pay package at IAC/Interactive.
The 3.8 million stock options he was awarded by his board constituted 100 percent of all stock options given out by the company last year.
This is a man who made over $441 million in profit from selling previously granted stock options in the last two years alone. He’s still got $167 million worth of stock options he hasn’t cashed in yet.
Stock options are supposed to provide an incentive to work hard. Diller is already the company’s largest shareholder, with 84 million shares. That isn’t enough motivation?
Apparently not. Like the other shareholders, Diller has made a very nice 200 percent over the last 11 years.
But he’s done a lot better as CEO, where his pay amounted to about 1,500 percent . Why not? With control of the voting stock, he gets to pick who serves on his board.
His two-person compensation committee includes former General Norman Schwarzkopf, who clearly knows less about being a director than he does about being a general.
My mom always says you should get what you deserve. That’s how I know that there’s something wrong with the pay packages at Hewlett Packard.
The board fired CEO Carly Fiorina for poor performance, but gave her a severance package that included more than $21 million in cash. That brought her compensation total to $180 million over five years.
Oh, the company also picked up the tab for hauling her yacht from the East Coast to California.
Her successor, Mark Hurd, got a mighty sweet multimillion dollar deal that included my favorite oxymoron — the “guaranteed bonus.”
His contract provides that all of his first-year goals are “deemed to have been achieved.” Nice work if you can get it.
And you can, as long as CEOs get to decide who serves on their boards.
MOON: Nell Minow is co-founder of the Corporate Library, an independent source on corporate governance and compensation.
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