15 CEOs, who should be paid $1 per annum

Wednesday, 24 March 2010, 15:49 IST   |    31 Comments
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Bangalore: Following the path of Lee Iacocca, former CEO of Chrysler in 1979 and Edward Liddy, former CEO of Allstate (ALL); Apple CEO Steve Jobs and Google CEO Eric Schmidt decided to work for $1 a year. CEOs take $1 year primarily for two reasons. The first is that the firms they run are in deep trouble that they make the gesture to show that are willing to share the sort of sacrifice that their employees and shareholders must. The second reason is that some people who run companies, particularly those in which they own large positions in the firms, would be viewed as greedy to take compensation to operate the corporations that have made them rich. 24/7 Wall St. has put together a list of 15 CEOs who are paid too much, and should work for $1 a year. The people on the list are a combination of chief executives at companies which have taken Federal money or still survive on large taxpayers loans. 1. AIG's Chief Executive Robert Benmosche has an annual package of $10.5 million approved by pay czar Kenneth Feinberg. He took the package even though a number of AIG executives have much lower capped compensation and some AIG managers gave up bonuses that they earned earlier. Benmosche threatened to quit AIG last November in a fit over government restrictions on his company. He spent part of the summer at his Croatian villa while AIG was in deep trouble, a symbol of how little he cares about the symbolic value of spending long days in the office after taking the reins of a troubled firm supported by taxpayers. Benmosche served as CEO of Met Life (MET) for eight years and left a wealthy man. 2. GM CEO Ed Whitacre, who has been the auto firm's chairman since last June, about the time GM came out of Chapter 11 with $50 billion in U.S. aid. After saying GM would make an extensive search for someone to replace the car company's CEO Fritz Henderson, who Whitacre forced out in December of last year, the chairman took the top job for himself in January. Whitacre then got the government to allow the GM board to grant him a $9 million compensation package. CEO claims that GM will repay taxpayer loans, but it is extraordinary that he will not work for $1 a year until then. He became wealthy running AT&T and its predecessor companies. 3. U.S. SEC filings do not show what Toyota (TM) CEO Akio Toyoda makes. Since his family founded the firm and still owns a stake in the world's No.1 car company, he is certainly well off. Recalls of more than eight million Toyotas worldwide will cost the corporation hundreds of millions of dollars. Some legal analysts believe that the damage from liability suits could set back Toyota another $5 billion. The trouble at the company drove its share price from $92 to $72. 4. The turnaround of Palm (PALM) has been a miserable failure. Some analysts even question its ability to survive, at least as an independent entity. Palm recently lost $18 million for its quarter ending February 28 and has lost money for 10 quarters in a row. Palm's guidance for future quarters sent the firm's stock down nearly 30 percent the day after it released it earnings. The shares have plunged from $18 in October to $4. Jon Rubinstein, Palm's CEO, took over in June 2009 so the entire collapse in share price has happened on his watch. The Palm proxy said he made $4.2 million last year. He should drop that to $1 for nearly destroying the company. 5. Freddie Mac (FRE) has a new CEO as of October - Charles Halderman. As the former chairman of Putnam Investment Management, he almost certainly became wealthy. 6. Fannie Mae's CEO, Michael Williams received $900,000 in salary for 2009. He got $3.1 million in 'deferred salary' that was paid out in four cash installment last year. 7. Blockbuster (BBI) CEO James Keyes made $8.4 million in the company's last fiscal year. The movie rental company is teetering on the brink of Chapter 11. Keyes made none of the critical strategic moves that could have built revenue around internet streaming rentals, DVDs by mail, or kiosk-based rental services. His decisions, or lack of them, have helped push the firm's share price from $1.40 last September to $.31. 8. Michael Dell has done a great deal of damage to his company, Dell Computers (DELL), since he took over as CEO from Kevin Rollins in February 2007. Dell had backed Rollins in public right up until the end. The company earned $4.6 million in 2006, Rollins' last full year. Net income has not matched that level since then. Dell's shares have fallen about 40 percent since Rollins left. The company has struggled with customer service problems and an inability to develop a blockbuster product. Dell owns 226 million shares of his company which is over 11 percent of the outstanding shares. He made $2.2 million last year, hardly reasonable for a man who has done a great deal to ruin his firm's chances to compete effectively with its largest competitors. 9. Lloyd Blankfien, CEO of Goldman Sachs, made the symbolic gesture of taking nearly no pay this year, at least compared to the tens of millions he has taken in years past. Blankfein's compensation for 2009 was a mere $862,657. He made $54 million in 2007 and $41 million in 2008. Goldman's board could certainly argue that Blankfein should have been paid better. Goldman posted record profits in its last fiscal year and its shares are up 60 percent over the last year. But, Goldman's image with the Administration, Congress, and the public has been badly damaged. Its role in the collapse of AIG is still in question. Blankfein would, from a strategic standpoint, be better off in the court of public opinion, or the next time that he has to go before Congress, to be able to say he was paid $1 even if Goldman is doing extraordinarily well. 10. It is nearly impossible to find a company that dominates as its industry as much as Nokia (NOK). It has let such a large multitude of its opportunities be successful taken over by smaller competitors. Olli-Pekka Kallasvuo runs the world's largest handset company by far. Nokia has a market share of about 35 percent globally, but, the high-end of the market has gone to RIM (RIMM), Apple (AAPL), and more recently to Google (GOOG) Android operating system powered phones. Olli-Pekka Kallasvuo will be remembered as a CEO who let his company's size advantage be squandered because of lack of innovation. 11. Take-Two Interactive (TTWO) has been one of the more poorly run companies in the video game industry since Zelnick Media took over the job of operating the firm through a management contract. Strauss Zelnick is Take-Two's Chairman, and one of his underlings at Zelnick Media, Ben Feder, acts as Take-Two's CEO. They should make no more than $1 between them. 12. Howard Stringer was brought in to turn Sony (SNE) around when he was made CEO in 2005. Over that period, Sony's stock has gone from $40 to $36, significantly underperforming the DJIA. Sony, under Stringer's stewardship, has run third in the three-horse race in the video console business behind Microsoft (MSFT) and Nintendo. Its TV and digital camera businesses have had shrinking margins, and Sony has been bested by a number of firms, particularly Apple (AAPL) and Amazon (AMZN), in the consumer electronics sector. 13. TheStreet.com has been through a period of bad earnings and worse financial reporting problems since Darryl Otte took over as interim and then permanent CEO starting in March 2009. In 2009 the firm had revenue of $60.2 million, down 15 percent from 2008. Operating expenses for 2009 were $93.2 million, increase of 29 percent. For the trouble he has caused shareholders over the last year, Otte received a base salary of $425,000, a potential bonus of $320,000, and 650,000 restricted stock units. 14. Dan Hesse, the CEO of Sprint (S), made $19 million in 2008. The company lost $2.4 billion on $32.3 billion in revenue in 2009. The numbers look worse compared with the improvements in the results from AT&T Wireless and Verizon Wireless, Sprint's two larger rivals. Sprint's stock is down over 70 percent since Hesse took over and there is nothing to make investors think that the problems at the company will do anything other than get worse. 15. GE (GE) CEO Jeff Immelt has run the conglomerate since 2001 and the company's stock has dropped from $54 to $18 over that period. Perhaps one good thing Immelt did is to agree to sell a controlling interest, which he said he never do, of NBCU to Comcast (CMCSA). The entertainment unit never seemed to fit well inside GE. Unfortunately, NBCU was not really GE's biggest problem last year. Due to underperformance at its capital unit and some of its industrial and infrastructure divisions, GE's earnings dropped from $17.4 billion in 2008 to $11 billion last year. GE public relations has made a great deal out of the fact that Immelt has not taken his bonus for two years in a row, but he made $9.9 million last year and still had a base salary of $3.3 million.