Yahoo had a list of 15 worst companies for customer satisfaction. http://finance.yahoo.com/news/the-15-most-disliked-companies-in-america.html I wondered how the CEOs of these companies ranked in pay. I found a list of the top 500 highest-paid CEOs at "Gravity Defying CEO Pay". h
Matching the two lists, I found the following selection:
Time Warner 6th worst, Jeffrey L. Bewkes, 62nd highest, 19.79 million annual pay, 10.3
Comcast, 4th worst, Brian L. Roberts, 70th highest, 18.77 million annual pay, 17.5
Century Link, 11th worst, Glen F. Post III, 121st highest, 13.74 million annual pay, 1.25
Delta Airlines, 10th worst, Richard H. Anderson, 130th highest, 13.17 million annual pay, 1.37
Aetna, 13th worst, Mark T. Bertolini, 329th highest, 4.76 million annual pay, 0.37
United Airlines, 5th worst, Jeffrey A. Smisek, 346th highest, 4.36 million annual pay, 0.87
American Airlines, 8th worst, Thomas W. Horton, 482nd highest, 1.25 million annual pay, 0.16
Bank of America, 15th worst, Brian T. Moynihan, 447th highest, 2.26 million annual pay, 0.15
Charter Communications, 3rd worst, Thomas M. Rutledge, 460th highest, 2.00 million annual pay, 0.67
The final figure in the above list is the annual pay divided by the Forbes ranking on worst customer service. Notice how the top two highly paid CEO have the worst ranking. To be fair, I haven't ranked those companies with good or excellent service. But could these CEOs executive excessive salaries be partly because they aren't involved in "free market" capitalism? How much competition do phone and cable companies have? How much real competition do airlines have? I am thankful that there are still local banks to provide competition for the mega-banks.
Who was at the bottom of the highest paid list? Larry Page of Google with zero salary. However, he does have over 16 billion dollars worth of Google shares out of nearly 192 billion of capitalization. Many of us have a love-hate relationship with Google, how many of us can go a day without using some Google service?
Should anybody get nearly 20 million dollars for making a lot of people unhappy? Should anybody get even 1.25 million dollars for poor service?
Where do I get good service? From locally-owned businesses - BAM Style, Minnesota Surplus, Denny's Lawn and Garden, and many others. Some of the owners may be millionaires, but that is their net worth, not their annual salary. And I get to talk directly with the owners. Do you think Glen F. Post at 13.17 million per year would talk to me about Century Link's customer service? See "Who is worth more, the CEO with rigid rules or the employee giving excellent service?"
Showing posts with label executive compensation. Show all posts
Showing posts with label executive compensation. Show all posts
Tuesday, July 03, 2012
Thursday, April 19, 2012
The kleptocracy of corporate boards
Many corporations fight vigorously against unions, claiming that they would ask too much in pay.
But executives and board members of these corporations never seem to recognize that they have a union that determines their own pay. I just checked the executive pay of Radio Shack - over $11 million for seven current and former executives for 2011. The board of ten grants each of its members $150,000 in stock each year. Talk about the foxes guarding the chicken coop.
Oh, yes, Radio Shack's stock dropped by a half over the past year. The above compensation is not pay for performance but kleptocracy - rule by thievery.
I single out Radio Shack because its proxy statement is the latest that I read. Corporation after corporation rewards their top executives and board members quite well regardless of how well the corporation fared.
If corporations are sending work to lower wage countries, why not send CEO jobs to countries like Sweden, Norway, France, or Belgium? CEOs in these countries average a third of less the total compensation of U.S. CEOs. See "CEO Compensation: US and other countries", Ben Lorica, last updated Oct 2011. Better yet, why not export the CEO jobs to India or China? I haven't checked, but I bet CEO pay is a lot lower than in Europe.
But things are changing. Citigroup shareholders voted no on the CEO's compensation. The shareholders of three other companies did likewise. As of today, a search of "Executive Pay" yields many articles about the ongoing revolt against CEO pay - from unions to church groups to large investors.
P.S. See "Director pay: how high can it go?", footnoted*, Michelle Leder, 2012-04-13.
But executives and board members of these corporations never seem to recognize that they have a union that determines their own pay. I just checked the executive pay of Radio Shack - over $11 million for seven current and former executives for 2011. The board of ten grants each of its members $150,000 in stock each year. Talk about the foxes guarding the chicken coop.
Oh, yes, Radio Shack's stock dropped by a half over the past year. The above compensation is not pay for performance but kleptocracy - rule by thievery.
I single out Radio Shack because its proxy statement is the latest that I read. Corporation after corporation rewards their top executives and board members quite well regardless of how well the corporation fared.
If corporations are sending work to lower wage countries, why not send CEO jobs to countries like Sweden, Norway, France, or Belgium? CEOs in these countries average a third of less the total compensation of U.S. CEOs. See "CEO Compensation: US and other countries", Ben Lorica, last updated Oct 2011. Better yet, why not export the CEO jobs to India or China? I haven't checked, but I bet CEO pay is a lot lower than in Europe.
But things are changing. Citigroup shareholders voted no on the CEO's compensation. The shareholders of three other companies did likewise. As of today, a search of "Executive Pay" yields many articles about the ongoing revolt against CEO pay - from unions to church groups to large investors.
P.S. See "Director pay: how high can it go?", footnoted*, Michelle Leder, 2012-04-13.
Saturday, January 21, 2012
Reading the fine print so we don't have to
Morningstar has started a new service called footnoted, which reports and analyzes the fine print of many companies' SEC filings.
The edition available today includes articles on
Jerry Yang leaving Yahoo "to pursue other interests, and not due to any disagreement with the Company",
The perks at a dental supply company that explain why your dental work costs so much,
The golden parachutes for executives who screw up, and
The whopping entitlements that directors at Google get.
I've added footnoted.com to my bookmarks. It will be interesting to delve into it now and then.
The edition available today includes articles on
Jerry Yang leaving Yahoo "to pursue other interests, and not due to any disagreement with the Company",
The perks at a dental supply company that explain why your dental work costs so much,
The golden parachutes for executives who screw up, and
The whopping entitlements that directors at Google get.
I've added footnoted.com to my bookmarks. It will be interesting to delve into it now and then.
Thursday, October 20, 2011
The 1% earned their money?
Anybody who reads the news regularly knows that there is plenty of back-scratching in the executive suites and board rooms of large companies. Not only do they provide bribes, er, campaign contributions to OUR supposed representatives, but they reward each other handsomely with no justification other than some mumbo-jumbo about performance in the proxy statements.
There is little mention of all the people who are paid far, far, far less but made all this "performance" possible. It's a bit like d'Artagnan of Three Musketeers fame who kicked his servant Planchet for "poor performance" but the servant did almost all the work except the sword fighting.
For some examples of this over-compensations see "The Most Outrageous Acts of Corporate America", The Daily Ticker with Daniel Gross, 2011-10-20.
There is little mention of all the people who are paid far, far, far less but made all this "performance" possible. It's a bit like d'Artagnan of Three Musketeers fame who kicked his servant Planchet for "poor performance" but the servant did almost all the work except the sword fighting.
For some examples of this over-compensations see "The Most Outrageous Acts of Corporate America", The Daily Ticker with Daniel Gross, 2011-10-20.
Wednesday, March 30, 2011
Greedy corporate boards
Eric Jackson, The Street wrote "How Do You Slow Down Executive Pay?", Yahoo! Finance, 2011-03-11. He thinks that we don't need the gimmicks live shareholder advisories on pay. He says shareholders should simply throw the votes out.
I added the following comment to the article.
"I agree with Eric Jackson; vote the bums out.
I've felt like a lone voice for years. I withhold my vote when the CEO gets over a million dollars a year or when the members of the board get over $100,000 a year. The latter is nice work if you can get it; show up five times a year (not every board meeting!!!). Many of us would be in the gravy with that pay.
And what is a CEO doing on the boards of other companies? Isn't he or she being paid a lot of money to run one company? Maybe the pay for being on other boards should be reimbursed to the company the CEO is running."
And later I added:
"Oh, I almost forgot about these boards gradually stealing the company from the shareholders that bought their shares on the open market.
To "align the interest of the board and the executives with the interests of the shareholders", they grant themselves stock, either directly or through options (the ability to buy shares at way below market value). The net result is they are granting themselves more and more votes at a discount from what the regular shareholders paid.
In other circumstances, isn't this called skimming and either criminal or unethical? Now, to put any kind of restraint on this behavior is called anti-business."
I didn't add that when I worked for Sperry Univac in the 70s, somebody published an article about attending a Sperry Board meeting. The directors were served an elaborate meal that many hardly touched. Some of the directors slept through parts of the meeting or said very little.
I've heard that in many companies, the board just agrees to what the company executives propose and go home. Nice work if you can get it.
I added the following comment to the article.
"I agree with Eric Jackson; vote the bums out.
I've felt like a lone voice for years. I withhold my vote when the CEO gets over a million dollars a year or when the members of the board get over $100,000 a year. The latter is nice work if you can get it; show up five times a year (not every board meeting!!!). Many of us would be in the gravy with that pay.
And what is a CEO doing on the boards of other companies? Isn't he or she being paid a lot of money to run one company? Maybe the pay for being on other boards should be reimbursed to the company the CEO is running."
And later I added:
"Oh, I almost forgot about these boards gradually stealing the company from the shareholders that bought their shares on the open market.
To "align the interest of the board and the executives with the interests of the shareholders", they grant themselves stock, either directly or through options (the ability to buy shares at way below market value). The net result is they are granting themselves more and more votes at a discount from what the regular shareholders paid.
In other circumstances, isn't this called skimming and either criminal or unethical? Now, to put any kind of restraint on this behavior is called anti-business."
I didn't add that when I worked for Sperry Univac in the 70s, somebody published an article about attending a Sperry Board meeting. The directors were served an elaborate meal that many hardly touched. Some of the directors slept through parts of the meeting or said very little.
I've heard that in many companies, the board just agrees to what the company executives propose and go home. Nice work if you can get it.
Friday, June 11, 2010
If corporations are persons then…
Let's not only give them some of the "rights of persons" like "free speech", let's give them some of the responsibilities and consequences of being persons.
If corporations are persons then shouldn't they pay personal income tax? Many argue that corporate taxes are taking away from shareholders or are being passed on to customers. Well, aren't exorbitant executive salaries being decided by a self-selected board of directors taking away from shareholders also? Aren't the taxes being paid by my plumber or my barber being passed on to me? So, what's so different about corporations if they are considered persons?
If corporations are persons then shouldn't they be restricted severely for pollution? If I burn trash in my backyard or have a faulty furnace that is sending soot all over the neighborhood, won't I be called to account for it by my neighbors and the city? If I dump poisonous chemicals in my sink, won't I be called to account for it? If corporations are persons then shouldn't they be held to the same standards as physical persons?
If corporations are persons then shouldn't they suffer the same consequences for capital crimes? If a corporation commits such malfeasance that people die then shouldn't it go to prison? Prison in this case could be putting all its assets in escrow for the equivalent prison time. If a corporation willfully murders people and if the jurisdiction executes murderers then shouldn't the corporation be liquidated? Blackwater employees willfully shot Iraqis. The only consequence was the loss of some contracts and the company reorganized under a different name. Do you think that you or I could publicly change our name and address to escape punishment for any crime?
Remember the old adage: be careful what you ask for, you may get it.
If corporations are persons then shouldn't they pay personal income tax? Many argue that corporate taxes are taking away from shareholders or are being passed on to customers. Well, aren't exorbitant executive salaries being decided by a self-selected board of directors taking away from shareholders also? Aren't the taxes being paid by my plumber or my barber being passed on to me? So, what's so different about corporations if they are considered persons?
If corporations are persons then shouldn't they be restricted severely for pollution? If I burn trash in my backyard or have a faulty furnace that is sending soot all over the neighborhood, won't I be called to account for it by my neighbors and the city? If I dump poisonous chemicals in my sink, won't I be called to account for it? If corporations are persons then shouldn't they be held to the same standards as physical persons?
If corporations are persons then shouldn't they suffer the same consequences for capital crimes? If a corporation commits such malfeasance that people die then shouldn't it go to prison? Prison in this case could be putting all its assets in escrow for the equivalent prison time. If a corporation willfully murders people and if the jurisdiction executes murderers then shouldn't the corporation be liquidated? Blackwater employees willfully shot Iraqis. The only consequence was the loss of some contracts and the company reorganized under a different name. Do you think that you or I could publicly change our name and address to escape punishment for any crime?
Remember the old adage: be careful what you ask for, you may get it.
Wednesday, April 21, 2010
Some perspective on UnitedHealth Group's profit
Yesterday UnitedHealth Group reported first quarter earnings of $1.19 billion and revenue of $23.19 billion.
Assuming the population of the United States is 300 million, $1.19 billion means nearly $4 for each man, woman, and child and $23.19 billion means about $77 for each person. That's just for the first quarter. If the figures stay about the same for the next three quarters, then the per person figures will be $16 and $308, respectively.
The CEO of UnitedHealth received $98.6 million compensation last year. That's about thirty-three cents per person("UnitedHealth CEO reaps nearly $100 million from stock options", David Hilzenrath, Washington Post, 2010-04-16).
One commentator said that the CEOs pay was not that exorbitant because much of it was the exercise of options granted several years ago. But where did the stock come from when the options were exercised? I bet the 4.9 million shares came from the UnitedHealth treasurer, that is, shares set aside at the time of granting the options. Stephen Hemsley paid $8.72 per share when they were trading for $28.94. If UnitedHealth had sold those shares on the market, it could have gotten about $98 million more. That could go a long way to reducing health care premiums for a lot of people.
Assuming the population of the United States is 300 million, $1.19 billion means nearly $4 for each man, woman, and child and $23.19 billion means about $77 for each person. That's just for the first quarter. If the figures stay about the same for the next three quarters, then the per person figures will be $16 and $308, respectively.
The CEO of UnitedHealth received $98.6 million compensation last year. That's about thirty-three cents per person("UnitedHealth CEO reaps nearly $100 million from stock options", David Hilzenrath, Washington Post, 2010-04-16).
One commentator said that the CEOs pay was not that exorbitant because much of it was the exercise of options granted several years ago. But where did the stock come from when the options were exercised? I bet the 4.9 million shares came from the UnitedHealth treasurer, that is, shares set aside at the time of granting the options. Stephen Hemsley paid $8.72 per share when they were trading for $28.94. If UnitedHealth had sold those shares on the market, it could have gotten about $98 million more. That could go a long way to reducing health care premiums for a lot of people.
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