Your daily news source delivered with style by Mic Check Radio, a project of the Center for American Progress Action Fund.
When Stocks Fall, CEOs Profit
April 11, 2008
By now, you know the story: The bursting of the real estate bubble last summer caused credit markets to seize up and destroyed hundreds of billions of dollars of shareholder value. [USA Today]
Americans, reeling at the plummeting values of their homes, felt substantially poorer as America toed the recession line.
So everyone’s feeling the heat, right? Wrong. As companies’ stocks nosedive, industry CEOs are continuing to pull in massive salaries and bonuses.
Take, for example, the company KB Home. The firm had, by all accounts, a horrible year. It lost “$929 million on revenue of $6.4 billion. Shareholders also suffered from the home builder’s anemic performance, as the company’s share price dropped from $53 last February to the high teens by November.”
KB’s CEO, however, continues to roll in it. Jeffrey Mezger (the CEO) was awarded a $6 million cash bonus for 2007, on top of his $1 million base salary.
At Washington Mutual, a leading mortgage provider that went from a $3.6 billion profit two years ago to a $67 million loss last year, CEO Kerry Killinger took a 21 percent pay cut.
Sound harsh? It’s not. Killinger was paid $18.1 million in 2006, $14.4 million in 2007.
A USA TODAY review of CEO pay for 50 of the largest companies in the Standard & Poor’s 500 showed the median compensation last year was $15.7 million.
In other words: Despite the economic downturn, CEOs fared far better than their investors.
But wait, you ask, heads rolled in corporate offices this year, right? Yes. But that doesn’t mean much.
Take, for example, Chuck Prince, the Citigroup CEO who was told to pack his knives and leave in November. On his way out the door, Citi’s board gave Prince a bonus of $10 million. He was also allowed to keep $28 million worth of unvested restricted stock and options, and was granted $1.5 million in annual perks.
“It’s outrageous for CEOs to take risks that hurt shareholders and walk away with enough to never have to work again,” says Robert Mittelstaedt, dean of the W.P. Carey School of Business at Arizona State University.
Social Bookmarking
--------
Comments
|
!
