By Bruce Mushial
If you've been following what
the CEOs of some of the largest companies are making, you're
probably asking how you sign up for that job. Sandy Weill,
the head of Citigroup made $151 million last year.
Larry Ellison, the top dog at Oracle made $92 million in
2000. Jack Welch in his final year as the head of General
Electric will make off with $152 million. You have
to feel bad for Apple Computer chief Steve Jobs. For the
past two years he has only taken a $1 salary from the strapped
company. Now Steve's frugality hasn't gone unrewarded
by the company. Last year in addition to his $1 they did give
him a personal Gulfstream V business jet worth $40 million.
This year they added to his $1 with an option on 20 million
shares of Apple stock. The current value of his options is
$872,000,000. No, we didn't add too many zeroes; the value
of his options really IS $872 million. Now that is an incentive!
You really have to feel sorry for Mr. Jobs; he even has to
work two jobs, his other being the head of Pixar Animation
Studio, which created movies such as Toy Story. How did these
enormous pay packages come about? Some struggling companies
fire their current CEO and look for a replacement. The people
they want are currently successful CEOs of other companies.
Many of these CEO candidates will lose their current options
plans when they leave their current position. So the hiring
company has to frequently come up with a generous compensation
plan that replaces these options worth millions of dollars,
in addition to a respectable compensation package for taking
over the helm of a troubled company. And of course we can't
have corporate executives making less than professional sports
players or sitcom stars. What does all this mean to you? Of
course these pay packages and perks come off the bottom line,
reducing the amount of net income reported as earnings per
share. Since stocks are frequently valued by their current
and future earnings, these hits to the bottom line negatively
affect the shareholder. Now if you are one of these CEOs,
congratulations. If you're just one of their shareholders
you might start taking down the names of the board members
who approved these large pay packages for the next time a
vote for board members shows up in your mailbox.