4. Miles White
> Company: Abbott Laboratories
> Total compensation: $25,564,283
> Change in stock price: -11.3%
Abbott Labs (NYSE: ABT) recently announced it would break itself into two companies. It was the best thing management has done for shareholders in years. Abbott has been criticized for its acquisition spree, and now it has decided to break the businesses it has acquired into parts. Abbott has also struggled with product development. The drug and medical device company has failed to develop any major pharmaceuticals out of its M&A operations in the past two years. Abbott’s revenue rose from $30.8 billion in 2009 to $35.2 billion in 2010, but net income fell from $5.7 billion to $4.6 billion.
3. Laurence Fink
> Company: BlackRock Inc.
> Total compensation: $23,839,294
> Change in stock price: -17.9%
Laurence Fink is considered the best money manager in the world. BlackRock (NYSE: BLK) is the largest money management firm in the U.S., with assets under management of $3.66 trillion. Fink is one of the few large financial firm CEOs who made it through the credit crisis and subsequent government investigations of Wall St. entirely unscathed. He continues to be well-regarded by the press. Fink was recently added to the Forbes “World’s Most Powerful People.” None of these accolades, nor the size of BlackRock, has done much to help investors. While EPS last year were up 53% to $10.94, the stock price dropped nearly 18%. One of the major concerns about BlackRock is that it is so large it cannot outperform the markets. Also, most money management firm stocks did poorly last year because of concerns about the economy and the debt situation. That may not be BlackRock’s fault, but it cost investors. It should have cost Fink.
2. Tom Ward
> Company: SandRidge Energy Inc.
> Total compensation: $21,756,257
> Change in stock price: -22.4%
SandRidge (NYSE: SD), an oil and natural gas company, has piled on debt as it has moved from gas to liquid energy assets. In the process, SandRidge spent $2.2 billion on assets in the Permian Basin and $1.8 billion for acreage on the Anadarko Shelf. Long-term debt reached $2.9 billion at the end of 2010. The debt is listed as one of the risk factors in the company’s 10-K. SandRidge’s prospects improved in 2010 as revenue rose to $932 million from $591 million in 2009. However, last year’s sales were well below the $1.2 billion the company brought in during 2008. SandRidge lost $3.2 billion in 2008 and 2009 combined. This improved to net income of $153 million last year.
1. John Chambers
> Company: Cisco Systems
> Total compensation: $18,871,875
> Change in stock price: -31.4% (FYE: 7/30/2011)
Cisco (NASDAQ: CSCO) was once considered the most well-run large company in Silicon Valley. That has changed in the last year as it has become clear that Chambers, a dean of Valley CEOs, diversified that company too far beyond its core router business. Margins in the new set-top box, WiFi, and video conference businesses do not match those of routers. Chambers has begun a retreat from his M&A strategy, trying to refocus the company. He has had only limited success so far. Cisco has also announced that its rapid growth will slow considerably in the next two years.
Douglas A. McIntyre