CEOs Rake It In When Their Companies Tank
CEOs still make the big bucks when their companies founder in the stock market.
April 30, 2008— -- Being a CEO these days, according to the people at Forbes magazine, is like playing on a kiddie soccer team: everyone gets a prize ... often a very expensive prize.
"Supposedly, you get paid for performing in corporate America — but you don't," Forbes senior editor Neil Weinberg said. "It's like a fourth grade soccer league where everyone gets a trophy."
Forbes ranked the worst performing CEOs in America by comparing executive pay to stock performance.
The magazine's list of "Worst Performing Bosses" includes James Tobin, CEO of Boston Scientific, who made an average of $8.2 million while his company stock inched up by an average of 1 percent. It also included Kevin Sharer of the Biotech company Amgen, who made an average of $12.3 million a year while his company's stock dropped, on average, 4 percent a year. Another CEO on the list, Michael Perry of Indymac Bancorp, raked in $6.8 million while his company's stock plummeted 23 percent.
But the best paid, worst performing CEO, according to Forbes, is Angelo Mozilo of Countrywide, the nation's largest home lender. He raked in an average of $66 million a year while his company nearly collapsed, the stock falling an average of 9 percent a year. That's not including the hundreds of millions he got cashing in his own company stock.
"The fact that he has been making so much money, $102 million a year over the last year, is what people find egregious," Weinberg said. "They can't understand why this company is melting down, why it's having to be rescued from virtual bankruptcy. yet this man, who's been talking up the company, has been selling stock, is not really paying the price for it."
CEOs have advantages that the average American worker does not, that might allow them to get paid for failure. Critics say that all too often, boards of directors, which set CEO pay, are filled with the CEO's cronies.
"It's a very incestuous business," Weinberg said. "People are on each other's boards, they are hired by the chief executive, they are thankful to be a part of the club.
