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TOP EXECUTIVES STILL CASH IN, REGARDLESS OF PERFORMANCE

High-profile meltdowns aside, it still pays to be the boss.

Hewlett-Packard Co.'s Carly Fiorina, recently muscled out of her job over lackluster performance, walked away with an exit package worth $42 million.

Boeing Co.'s Harry C. Stonecipher, pushed out over an affair with a female employee, nonetheless is eligible for retirement benefits of about $600,000 per year.

Franklin D. Raines bowed out under heavy pressure in December following accounting problems at Fannie Mae. But the firm says he is now owed $114,393 per month in pension benefits.

At many other corporations untouched by scandal, pay continues to climb whether performance is great, lousy or middling.

"Even though the escalation of pay has often been justified as necessary, when you look at the details, that is not the case, because much of the pay is not all that sensitive to performance," said Harvard Law School professor Lucian A. Bebchuk, author of the new book "Pay Without Performance."

"Our view is that pay is much less connected to performance than investors commonly recognize," he said.

Among the biggest pay winners in 2004 was Morgan Stanley chief executive Philip J. Purcell, who pulled down $22.5 million, including $13.8 million in restricted shares. Some Morgan Stanley shareholders have criticized Purcell's pay because, while the firm's earnings grew 18 percent in its fiscal 2004, the company's stock price dropped about 6 percent.

At Coca-Cola Co., chief executive E. Neville Isdell made about $11 million in cash, stock and bonus in 2004 and was awarded 450,000 stock options. Meanwhile, Coca-Cola shareholders watched the stock price fall from around $50 at the beginning of the year to just over $41 at year's end.

Overall, a study by Mercer Human Resource Consulting LLC found that bonuses at 100 big companies rose 46.4 percent in 2004, to a median of $1.14 million. The gains follow a decade of soaring executive compensation, a rise that has not been slowed by heavy criticism from some shareholder groups and institutional investors. Between 1993 and 2002, total compensation paid by all public companies to their top five executives was $260 billion, according to a study by Bebchuk and Cornell University professor Yaniv Grinstein.

From 1993 to 1997, executive pay amounted to 6 percent of total corporate profit, the study said. That number increased to 10 percent of aggregate corporate profit from 1998 to 2002. At companies whose shares are part of the Standard and Poor's 500-stock index, average chief executive pay rose from $3.7 million in 1993 to $10.3 million in 2002, a hike of 178 percent, the study said.

"It's not something that can be explained by the economic fundamentals of a company," Bebchuk said. "The ratcheting effect that you have during this period . . . the boom in the stock market, the increased use of equity compensation, has made large pay more acceptable to outsiders.

"It's provided a good cover for increasing pay levels," he added.

One thing that has changed in the past year or so is a reduction in the use of big stock-option grants. That is largely because a change in accounting standards will soon require the options to count as an expense against earnings. Some shareholder groups have strongly criticized options, saying they encourage managing for short-term stock price gains rather than long-term growth.

Some scandal-ridden companies have aggressively moved to collect pay and bonuses from their former executives. Tyco International Ltd. sued former chief executive L. Dennis Kozlowski and finance chief Mark H. Swartz, who are on trial on grand larceny and fraud charges in New York state court, seeking repayment of tens of millions of dollars in company loans.

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