10 Most Outrageously Overpaid CEOs
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In 2010, people cheered when Congress gave shareholders the right to vote on the pay of corporate CEOs. Too bad those nonbinding votes haven't embarrassed the greed out of the chief executives. In fact, CEO pay crept up another 5 percent last year, once again far outstripping wage gains for middle-class workers.
While some CEOs, such as GE's Jeffrey Immelt, took a modest pay cut in 2011, many continued drawing outsized checks. Here we list 10 of the most egregiously overcompensated executives. They're selected not just on the size of their pay packages, but how much more they were paid than their peers at similar companies, as well as the disparity between their personal fortunes and those of their employer. Collectively, they highlight the cozy relationships between today's corporate boards and their chief executives. "You don't suggest [corporate compensation] consultants who are Dobermans," Warren Buffet, a critic of excessive CEO salaries, quipped in this YouTube clip. "You get cocker spaniels and make sure that their tails are wagging."
Timothy D. Cook, Apple
Compensation: $378 million
Corporate profits (2010 –2011): +85%
Stock gain/loss (2010–2011): +34%
By far the nation's highest paid CEO, Tim Cook earned more last year than the next four best-compensated CEOs combined. He raked in 378 million times the salary of his predecessor, Steve Jobs, whose 2010 pay was just $1. Apple could pay Jobs so little because it had given him stock options early in his tenure that exploded in value with the launch of its iPhones and tablets. The company clearly wants to replicate that approach with Cook, whose pay was mostly a one-time grant of $377 million in Apple shares. But even when averaged over their 10-year vesting period, those shares at current prices give Cook an annual take of $38 million, which is more than all but nine CEOs earned last year. "If Apple continues its growth at even more modest levels than it has in the past," corporate governance consultant Paul Hodgson toldBloomberg, "then the award is going to far exceed anything we've ever seen."
David Simon, Simon Property Group
Compensation: $137.2 million Corporate profits: +67% Stock gain/loss: +33%
Simon and Cook are the only two CEOs of publicly traded companies who occupy the exclusive nine-figure niche, but other than getting big lump payments in stock, they have little in common. Simon's real estate investment trust earned just 4 percent of what Apple brought in last year, and it had smaller percentage gains in profits and stock price. Shareholders showed their displeasure at Simon Property Group's annual meeting in May, voting nearly 3 to 1 to reject Simon's pay deal. While the company responded that it would "take their views into consideration," it did not pledge to renegotiate Simon's pay.
David M. Zaslav, Discovery Communications
Compensation: $52.4 million Corporate profits: +80% Stock gain/loss:-2%
Shares in the media conglomerate that owns Animal Planet and the Discovery Channel slid last year over fears of ad revenue declines and concerns that the internet and Netflix are decimating cable profits. Even so, Discovery gave Zaslav a 23 percent raise, making him second only to Leslie Moonves of CBS (a much larger company) as the nation's highest-paid media executive. In May, Discovery Communications' stock slipped again when the company booked losses on OWN, its joint venture with Oprah Winfrey.
Michael S. Jeffries, Abercrombie & Fitch
Compensation: $46.6 million
Corporate profits: -16%
Stock gain/loss: -7%
Jeffries' pay more than doubled last year even as Abercrombie shares took a tumble, dragged down by the preppy retailer's poor performance in Japan, Canada, and Europe. He raked in more than four times as much as the CEO of Dicks Sporting Goods, a similarly sized retailer that logged a respectable 16 percent return on investment. Jeffries' company has resorted to antics such accusing Jersey Shore star Michael "The Situation" Sorrentino of damaging the brand by donning Abercrombie shirts on television. A day after the company offered Sorrentino " substantial payment" not to wear its clothes, its stock plunged 9 percent.