Critics Cite Ways to Curb CEO Paychecks

ByABC News
August 10, 2005, 12:38 PM

July 25, 2006, 2005 — -- Well before they left their companies under clouds of suspicion and criminal investigations, Bernard Ebbers of WorldCom, HealthSouth's Richard Scrushy and Enron's Kenneth Lay were all noted for their lavish CEO salaries.

The size and frequency of executive scandals the last several years has put chief executive performance under scrutiny, but the pay scale for corporate titans has continued to soar.

"CEO pay has certainly moved more than anyone else's pay," said Steven Hall, president of Pearl Meyer & Partners, a compensation consulting firm.

The New York-based company estimates CEO compensation climbed 13 percent in 2004 to reach an average of nearly $10 million per year at the nation's top 200 companies ranked by revenues. Ten years ago, that figure was around $3.5 million.

Few question that CEOs hold tremendous sway over the fortunes of their companies. But some shareholders and corporate consultants are beginning to question the lavish pay scales, stock options, pensions and buyout packages.

And it often appears that job performance is not even a factor. Former Hewlett-Packard CEO Carly Fiorina received a welcome package worth nearly $100 million when she joined the company in 1999. When she was fired last year, she reportedly received $21 million in severance -- despite a tenure that included poor revenues and heavy worker layoffs.

Last July, group of Morgan Stanley shareholders sued the company over the multimillion-dollar golden parachutes given to two short-term top executives, including former CEO Phil Purcell. Purcell was reportedly paid more than $106 million on his way out the door, even though the company's stock price has been slumping.

The lavish exit packages of underperforming executives continue to raise eyebrows.