Lee Iacocca, Chrysler’s CEO in 1979, worked for $1 a year while his company paid back taxpayers $1.2 billion in loan guarantees. Edward Liddy, former CEO of Allstate (ALL), was paid $1 a year when he stepped in to run the crumbling AIG (AIG) in September 2008 at the request of Henry Paulson, who was Treasury Secretary.
Among current CEO and business leaders, Steve Jobs of Apple (AAPL) works for $1 a year. Google CEO Eric Schmidt will make $1 this year and so will founders Sergey Brin and Larry Page. None of the four men, all of them billionaires due to ownership of stock in the companies that they run, needs the money.
CEOs take $1 year primarily for two reasons. The first is that the firms they run are in such 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. The second are CEOs who have severely damaged the prospects of the companies that they run but, for some reason, have kept their jobs.
24/7 Wall St. has looked at each of the 15 firms these CEOs run, their histories, stock prices, and any aid they have received from the federal government. The pay packages that the chief executives receive, based on proxies or other public information, were also researched.
1. AIG’s loud mouth Chief Executive Robert Benmosche had an annual pay package worth $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. The volatile Benmosche threatened to quit AIG last November in a fit over government restrictions on his company. If he had left, it would have been a severe setback for the struggling insurance firm which has received over $180 billion in US aid. Benmosche 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. He could certainly afford to work for $1 a year, as his predecessor Ed Liddy did.
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 US 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. An extensive search indeed. Whitacre then got the government to allow the GM board to grant him a $9 million compensation package. Whitacre’s lieutenants at GM were not so lucky Ken Fienberg recently said he will cut the number of senior GM executives who will receive base salaries of more than $500,000 this year. Whitacre claims 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. US 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. It has recovered some since then, but at one point the firm had lost over $30 billion in market capitalization. Toyoda told Congress that he puts his name on every car. He should show that means something.
4. The turnaround of Palm (PALM) has been a miserable failure. Some Wall St. 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% 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 of last year 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. Palm really can’t afford to pay him any more than that anyway