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Business bigwigs pocket billions
First of two parts.
Compensation for America”s top chief executives has skyrocketed into the stratospheric heights of pro athletes and movie stars: Half make more than $8.3 million a year, and some make much, much more.
CEOs of companies in the Standard & Poor“s 500 Index that filed proxy information in the first half of this year received a combined $4.16 billion in 2006, according to the formula used by the Associated Press.
The high cost of chief executive pay has drawn criticism in recent years as salaries rose, stock options paid off like lottery jackpots, and perks such as chauffeured cars and private jets spread. Still, there are few signs of any investor backlash.
Yahoo Inc.“s Terry Semel, whose Internet company has lagged Google Inc. in profit growth and stock performance, led the pack with total compensation last year of $71.7 million, according to the AP formula used to analyze those filings.
That”s more than 2½ times the $27 million in total compensation this year for the New York Yankees‘ Alex Rodriguez, baseball’s highest-paid player, and higher than the typical pay that A-list stars such as Brad Pitt or Leonardo DiCaprio earn for a movie — $20 million, plus 20 percent of the gross box-office take.
Mr. Semel was followed by two energy industry CEOs — Bob Simpson of XTO Energy Inc., at $59.5 million, and Occidental Petroleum Corp.’s Ray R. Irani, at $52.8 million. Investment banks and energy companies were the sectors with the highest-paid leaders.
Mr. Semel’s total illustrates one of the most pronounced recent trends in executive pay: Salary and cash bonuses account for only a small portion of total compensation. Almost all of his pay — $71.4 million — came as stock grants and stock options. His salary totaled $250,001.
Plus, the eventual payouts from stock options handed to CEOs could be substantially higher in future years if the overall market keeps floating most stock boats higher.
The top 10 earners were in disparate industries, but they all had one thing in common: They were paid at least $30 million in 2006.
It wasn’t supposed to turn out this way.
This was expected to be the year that investor anger over pay boiled over. After Home Depot Inc.’s Robert Nardelli and Pfizer Inc.’s Henry A. McKinnell left their battered companies with golden parachutes worth $210 million and nearly $200 million, respectively, shareholder activists entered proxy season in the spring primed for a showdown on pay and outsized retirement packages.
It didn’t happen.
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