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.
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.
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. According to Securities and Exchange Commission filings, Fannie Mae’s CEO, Michael Williams, and Haldeman each received $900,000 in salary for 2009. Each man got $3.1 million in “deferred salary” that was paid out in four cash installment last year. “This compensation is coming in the form of payments that they are more likely to get, without much risk,” Kevin J. Murphy, a professor at the University of Southern California, told the Associated Press. The two agencies received a total $110.6 billion in taxpayer money in 2009.
6. Fannie Mae (read above)
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. A payment of $1 would be generous.
9. Lloyd Blankfien, the 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% 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. Its role in helping Greece “hide” some of its sovereign obligations is being investigated as well. The man on the street believes that Goldman bankers will crawl over the backs of their own children to make money. 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.
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. The Zelnick Media agreement provides a monthly management fee of $208,333 ($2,500,000 per year) and the maximum annual bonus was increased to $2,500,000. The annual bonus for the fiscal year ended October 31, 2008 was $1,770,833. Since Zelnick Media has taken over TTWO shares are down 55%, the company has turned down a generous buyout offer from Electronic Arts (ERTS), and the firm’s financial performance has been abysmal.
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. TheStreet has been tardy in filings its financial data. The SEC is looking into the accounting for Promotions.com, a subsidiary that TheStreet sold in December for a reported $3.1 million. Otte has been a member of the company’s board since 2001, so he was intimately involved in the decision to buy Promotion. The Street’s diversification programs have not been successful. In 2009 the firm had revenue of $60.2 million, down 15% from 2008. Operating expenses for 2009 were $93.2 million, increase of 29%. 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.
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. The important question from the standpoint of compensation is what Immelt has done for shareholders more recently. 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
Douglas A. McIntyre. McIntyre was on the board of On2 Technologies with Mr. Zelnick and served with Mr. Otte on the board of TheStreet.com
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