Are These CEOs Worth It?

This morning's Wall Street Journal is a real eye-opener.

Leaning on proxy statement analysis by Hay Group, the highest-paid CEOs are singled out. Basing its rankings on total direct pre-tax compensation -- which includes salary, bonuses, and the value of stock and options granted -- in each company's latest fiscal year, there are more than a few surprises.

Now, I'm not the type of person to shake my head at executive compensation. Some of the country's highest-paid chieftains deserve even more than their already lofty pay packages. However, you're going to be shocked at a few of the laggards among the high rollers.

Let's go over the five CEOs with the heaviest paydays.

1. Liberty Media, Gregory B. Maffei, $87.1 million
Maffei's take quadrupled over the previous year, but you won't hear too many investors bellyaching. All three of Liberty's tracking stocks -- covering Liberty's ownership in QVC, Starz, and even the Atlanta Braves -- are trading near multiyear highs.

Maffei's worth it. In fact, just one move last year has more than paid for Liberty's executive ranks.

Sirius XM Radio (Nasdaq: SIRI  ) was in dire straits in February 2009, willing to give away gobs of equity for the right sugar daddy to bail it out of debt repayments it couldn't make on its own. Liberty stepped in through its Liberty Capital (Nasdaq: LCAPA  ) subsidiary, agreeing to let Sirius XM borrow more than $500 million at a high interest rate. More importantly for Liberty was the 40% preferred share stake it acquired, just for lending a helping hand.

The satellite radio giant has bounced back in a major way, and there are no more near-term liquidity concerns. Along the way, the stock price has gone from last year's bottom of $0.05 to $1.42, boosting the value of Liberty's 40% stake to more than $3.5 billion.

2. Oracle (Nasdaq: ORCL  ) , Larry Ellison, $68.6 million
The master of competitive digs and accretive acquisitions had a payday as large as his reportedly oversized ego.

Like Maffei, Ellison is also earning his keep. It's not just about the opportunistic buyouts and the enterprise software behemoth's knack for consistently landing ahead of Wall Street's profit targets. Ellison has been on a roll lately, positioning his company favorably by notable executive hires and positioning Oracle favorably in a copyright infringement case against a major rival.

3. Occidental Petroleum (NYSE: OXY  ) , Ray Irani, $52.2 million
When you run an oil and gas exploration giant valued at $70 billion, Irani's salary may not necessarily seem outlandish. It's also not just a one-year blip, since it's just a 5% bump in total direct pre-tax compensation from a year earlier.

It appears to be working, since analysts see revenue and earnings growing at healthy double-digit clips in 2010 and 2011. Given some of the spotty performances out of other energy bellwethers, Occidental Petroleum appears to be coasting.

4. Yahoo! (Nasdaq: YHOO  ) , Carol Bartz, $44.6 million
Finally! A shocker!

Yahoo! hasn't improved much since Bartz arrived early last year. Surely $44.6 million is excessive for a meandering dot-com heavyweight that has been losing executives, letting employees go, and scaling back in key areas.

Now, in her defense, Bartz' base salary was just shy of $1 million last year. Stock options and restricted stock grants made up the lion's share of her $44.6 million. However, she did also receive $1.5 million in annual incentives.

Really? Yahoo! shares are up 33% since she was officially introduced, but that's only about half of the increase in the Nasdaq composite index since mid-January of 2009.

5. CBS (NYSE: CBS  ) , Leslie Moonves, $37.6 million
It's unusual to see CBS rank this high, especially since its sister company Viacom (NYSE: VIA  ) clocks in right after with CEO Philippe Dauman's $33.7 million package last year.

Then again, shares of CBS climbed nicely last year, and CBS is routinely the primetime ratings champ over its rival networks.

A cynic may wonder if splitting CBS and Viacom into two distinct companies was more about beefing up compensation than unlocking the value in the old Viacom, but CBS appears to be leading the way out of the recession as advertising dollars begin to trickle in.

The Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz thinks Bartz is the least deserving of the five highest-paid CEOs and wonders if she regrets her decision to lead Yahoo!. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it's got mail.


Read/Post Comments (8) | Recommend This Article (6)

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  • Report this Comment On November 15, 2010, at 3:49 PM, lw67 wrote:

    I can tell you one name that isn't worth a plug nickel. John Chambers of CSCO has to be among the worst. Proof they say is in the pudding and his pudding is spoiled and smells worse with each quarter. Man has to have pulled $500m or more out of this co. and stock just keeps going DOWN. How much longer must one endure the pain of his mouth and failure.

  • Report this Comment On November 16, 2010, at 2:39 AM, koolkrissy wrote:

    They are all grossly over paid!!! A million dollars a year is an ample amount of money for any one person to earn. It puts a right ritzy roof over your head and a banquet on the table for every meal! Also provides some pretty nice duds for the walk-in closet! Can provide a pretty sharp vehicle or two to drive about town in too. TOO MANY people have lost their sense of worth! TOO MANY CEO'S desire and have the POWER to control their own pay so they can live like KINGS! What a sad day for America that we still have these GOLDEN HOGS running our publicly owned companies! Too bad they don't have to work in the factories before they can sit in the big chair! Too bad they don't have to pay their own bills on the "paltry pay" many of their workers are required to do. Too many have never lifted a finger to build the great company they are now privileged to run.

  • Report this Comment On November 16, 2010, at 12:04 PM, jkaj wrote:

    Koolkrissy: I agree with you 100%. What bothers me the most is the shareholders allowing this non-sense to go on.

  • Report this Comment On November 16, 2010, at 12:16 PM, RonWinkler wrote:

    If you don't like what these guys are paid, buy enough stock to vote them out of a job. You are you to tell anyone what they can or cannot earn. Did you actually read the article, one man earned his company 3.5 billion dollars. If I owned stock in that company, I would be more than willing to pay him 87.1 million or 2.8% commission.

  • Report this Comment On November 16, 2010, at 12:20 PM, verdure wrote:

    Rick,

    I think you are suffering from Stockholm syndrome. You've been held captive by these pirates for so long that you think that their plunder is normal. Oh well, there goes the classless society that our founders built.

  • Report this Comment On November 16, 2010, at 3:03 PM, Viking70 wrote:

    Um, seriously? $87.1M for one guy? Just because he "made" more than that for his company does not mean he is worth $87.1M. Get real. Maybe he should give his employees a raise or even better health care.

  • Report this Comment On November 16, 2010, at 9:03 PM, koolkrissy wrote:

    It continues to amaze me how so many CEO's are paid enormous salaries and bonuses even when they don't make money for their companies. It even is a bigger joke that the company has to "pay them" with their "golden parachute worth millions in most cases" to get rid of them. Shareholders don't have a lot to say about the pay of the CEO's. Unfortunately, that is determined by the Board of Directors which is generally made up of the CEO's buddies from other large corporations and banks. He in turn sits on their Boards and "helps decide what would be a fair amount to pay them". Great work if you can get it! It is the biggest scam in America and has been going on far too long. Does anyone really believe that the CEO is "solely" responsible for the profits of a company? I have no objection to exceptional pay for exceptional work; but I still think CEO's in general are grossly overpaid. The President of the USA has the most difficult job in the USA and he is not paid a million dollars. No, I don't think any of these $10 million plus "wonders" are worth it.

  • Report this Comment On November 17, 2010, at 1:03 AM, geogr772 wrote:

    I believe that a person should be able to earn whatever they can based on the performance of the company. I also feel that some of these salaries are a bit excessive and there should be some sort of rules on salaries if the company does not make money, and or is in so much dept that the gains of that year make little or no difference to the bottom line. Many companies have rouge boards and are willing to pay huge saleries while bankrupting the companies they own. The little guys who have invested thier money have no sat so and altimately lose it all. If the balance sheets are solid, pay the salary, if not, bonuses and other incentives should be off the table and protected by law if the CEO cant produce.

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