There is a nearly endless number of criteria that measure how well CEOs perform, whether they are paid fairly, and what metrics should be used for determining chief executive compensation. One yardstick that is never used but should be, is the simple ratio of market capitalization to pay. It takes into account the entire value of the company to shareholders and weighs it directly against annual compensation.
At the one end of the compensation to market cap ratio are relatively small companies that have very highly paid CEOs. At the other are chief executives at large companies who work for more modest sums and are either paid well for extraordinary financial results or have boards that believe that CEOs should not be paid like sultans
Every year, the media come out with lists of American public company CEOs who makes tens of millions of dollars. While some may have earned the money because of phenomenal results, others are paid well despite poor results. Our list of least valuable CEOs is based on chief executives who are paid handsomely, even though they run corporations with modest market caps and sales. Additionally, most of their companies have not done well, either financially or in terms of stock market performance.
Some of the companies on this list are run by founders or large shareholders. These people may well be in a position to have outsized influence over their own pay packages, which puts shareholders in an impossible position to effectively protest compensation. Other CEOs have been hired fairly recently to turn companies around. They have been paid well to take jobs in which they are expected to post great improvement, but they have not done so yet, and may never. .
24/7 Wall St. identified the least valuable CEOs based on executive pay relative to company market cap. We reviewed the market cap and CEO compensation for every S&P 500 company as of Dec. 31, 2011. If a company’s stock performance exceeded that of the S&P 500 Index between December 30th, 2011 and November 12th, 2012 it was excluded. CEOs who joined their companies or were promoted during the year in question have been included for the purpose of our measurements.
These are America’s least valuable CEOs.