It's good to be king, particularly in corporate America. When we
take a look at the 20 highest paid chief executive officers, we
find familiar names, some names not as well-known, some whose pay
is justified by increased shareholder value and some with pay
packages that will make your blood boil.
The CEOs on our list are widely spread among a variety of
industries, including: Technology (3), Media (3), Financial
Services (3), Pharmaceuticals/Healthcare (3), Defense (3), Energy
(2), Automotive (1),
Consumer Staples
(1) and Telecommunications (1).
Of the 20 companies with high-earning CEOs, 18 are listed on the
NYSE and 2 are listed on the Nasdaq. Only eight are Dow component
companies (to get the full list of Dow components, click here). No
women made the list in 2009.
Starting at the top, here are the 20 highest paid executives in
America:
Larry Ellison, Oracle (Nasdaq: ORCL)
2009 Total Compensation: $84.5 million
Ellison is usually somewhere toward the top of this list in any
given year. Being critical of Ellison's pay is difficult for a
couple of reasons. First, he founded Oracle, so this is his ship.
Second, the performance of the stock seems to justify the pay --
Oracle was up more than +33% in 2009 and has returned almost
+10,000% since
going public
in 1988.
[Ellison doesn't just make a ton of money; he also gives away a
ton of money. See what Ellison can teach you about being a
billionaire in one of the month's most popular articles,
3 Billionaire Habits for Non-Billionaires
.]
Ray Elliott, Boston Scientific (
BSX
)
2009 Total Compensation: $33.4 million
Elliott took the helm at Boston Scientific in July 2009, so one
could argue he needs more time to get the medical device maker
headed in the right direction. But detractors will tell you that
$33 million is far too much to pay the CEO of a company whose
shares have lost more than -50% in the past year and now trade for
around $5.
Ray Irani, Occidental Petroleum (
OXY
)
2009 Total Compensation: $31.4 million
Bigger isn't always better in terms of executive pay in the oil
patch. Irani regularly appears near the top of this list despite
the fact that Occidental is just the fourth-largest U.S. oil
company. Irani and Occidental have both come under fire lately from
shareholders concerned about executive pay and lack of a clear
succession plan. But, Irani has been CEO of Occidental since 1990,
and in that time its stock is up more than +400%.
Mark Hurd, Hewlett Packard (
HPQ
)
2009 Total Compensation: $24.2 million
Hurd is the former CEO of the world's largest personal computer
maker following a scandal involving his inability to properly fill
out expense reports. In addition to pay, Hurd was lavishly
compensated in other ways. He had access to the company jet and HP
shareholders even paid for his personal financial advisor. Yes, HP
stock almost doubled in Hurd's five-year tenure, but shares are
down -18.5% in the past two years, making it difficult to justify
the recent size of Hurd's deal.
James Hackett, Anadarko Petroleum (
APC
)
2009 Total Compensation: $23.5 million
Hackett deserves credit for transforming Anadarko from a sleepy
oil and gas producer to a major player on the global energy stage.
The company doesn't just do business in the U.S.; it has exposure
to exotic markets all over the world, and Hackett has overseen that
transformation. He took over as CEO in December 2003, and despite
the punishment Anadarko shares have endured recently for the
company's exposure to the Gulf of Mexico oil spill, the stock has
doubled from January 2004 through today.
A.G. Lafley, Procter & Gamble (
PG
)
2009 Total Compensation: $23.5 million
Lafley retired in February, which may be a relief to P&G
shareholders. He earned $71 million during the past three years
while the stock barely moved. Yes, the
dividend
was raised on Lafley's watch, but P&G has raised its dividend
annually for more than 50 consecutive years, so Lafley doesn't
deserve credit for that. In my opinion, this has been an example of
too much pay for too little performance.
William Weldon, Johnson & Johnson (
JNJ
)
2009 Total Compensation: $22.8 Million
Like P&G, Johnson & Johnson is another prodigious
dividend raiser. They've been raising payouts for so long that it
almost doesn't matter who the CEO is because that person wouldn't
want to be the one who ends the streak. Weldon hass been at the
helm since 2002 and has presided over J&J's dismal 5-year
return of -10%.
Miles White, Abbott Labs (
ABT
)
Total 2009 Compensation: $21.9 Million
At least we can say Miles White delivers more for his
shareholders than William Weldon does for his. Abbott is up +10% in
five years. White is the longest tenured Big Pharma CEO and he has
a tricky gauntlet to run as profitable patents like that for its
blockbuster drug Depakote expire. This is when we'll see if his big
pay benefits shareholders.
Bob Iger, Walt Disney (
DIS
)
2009 Total Compensation: $21.6 million
It's hard to argue with this one. Iger has led Disney to a +20%
gain in the past year, quadruple the Dow's performance. Not only
that, but Iger has been instrumental in restoring investor
confidence in Disney. The stock is up about +30% in the past five
years, but compared to the flat Dow, Iger looks pretty deserving of
his pay.
Samuel Palmisano, IBM (
IBM
)
2009 Total Compensation: $21.2 Million
IBM is up only +5% in the past year and shareholders have been
grumbling that the company could commit more cash to its dividend
than it does. IBM did just take advantage of ridiculously low
interest rates to raise $1.5 billion in bonds, so maybe some of
that money will find its way back to shareholders in the form of
dividends or share buybacks.
[A recent InvestingAnswers article from former IBM analyst and
current income investing expert, Amy Calistri, looks at whether
IBM's financing indicates that interest rates have bottomed. Read
more here:
One of America's Largest Companies Flashes a
Warning Sign for Income Investors
.]
Robert Stevens, Lockheed Martin (
LMT
)
2009 Total Compensation $20.5 Million
This one is tricky. In the past year, rival Boeing (
BA
) has sharply outperformed Lockheed (+23.8% vs. -3.6%). But if we
look at a five-year history (Stevens has run the show at Lockheed
for six years), Lockheed's +17.4% return handily beats Boeing's
-3.4%.
Randall Stephenson, AT&T (
T
)
2009 Total Compensation: $20.3 million
AT&T shares are essentially flat in the past year, but this
is one of the more predictable blue chips out there. AT&T takes
its dividend seriously and in a volatile market environment a CEO
that provides stable growth and a solid dividend is worth
rewarding.
Jay Fishman, Travelers Companies (
TRV
)
2009 Total Compensation: $20.1 million
Give Fishman credit: The financial crisis severely punished big
insurance companies, but Travelers never suffered in the same way
as American International Group (
AIG
) or Hartford Financial (
HIG
). Outperforming your rivals is key to commanding big-time paydays
and Fishman has done just that.
Jeffrey Bewkes, Time Warner (
TWX
)
2009 Total Compensation: $19.4 million
Considering the discrepancy in their respective stocks'
performance, the difference between Bewkes and Iger's pay at Disney
may not be big enough. Time Warner has trailed Disney in terms of
stock
appreciation
by so much (+7.0% vs. +20%) that it can be argued that the $2.2
million gap between Bewkes and Iger isn't nearly enough.
John Stumpf, Wells Fargo (
WFC
)
2009 Total Compensation: $18.8 million
Considering that Wells Fargo has been a solid performer under
Stumpf's leadership and that the stock was one of many financials
that rallied off the March 2009 market lows, Stumpf's big pay-day
can be given a pass for now. But investors will be looking for the
dividend to be restored soon, so that some of that big money can be
funneled into their pockets instead of Stumpf's.
James Cracchiolo, Ameriprise Financial (
AMP
)
Total 2009 Compensation: $18.2 million
Ameriprise tripled off its March 2009 low, so we'll give our
seal of approval to Cracchiolo's pay and performance. The market
was certainly favorable to financials for much of 2009, but a
triple in 18 months is still pretty impressive.
Rupert Murdoch, News Corp. (Nasdaq: NWSA)
Total 2009 Compensation: $18 million
Murdoch built News Corp, and it's hard to think of anyone who
would get in the way of a man being paid by his own company. But in
all fairness, News Corp stock almost doubled in 2009, even taking
into account a tough media and advertising environment. A pretty
impressive performance.
Ronald Sugar, Northrup Grumman (
NOC
)
Total 2009 Compensation: $17.9 million
Considering how sharply Northrup Grumman has outperformed
Lockheed Martin in the past 52 weeks (+13.5% vs. -3.6%), it might
be fair to say Sugar was underpaid compared to Stevens. Even so,
the point is moot: Sugar stepped down as CEO and chairman at the
end of 2009 and officially retired in June 2010.
Alan Mulally, Ford Motor (
F
)
Total 2009 Compensation: $17.9 million
We'll make this one short and sweet: Given Ford's dramatic
turnaround
in both operating and share price performance under Mulally's
stewardship, it can certainly be argued that this man is
underpaid.
Louis Chenevert, United Technologies (
UTX
)
Total 2009 Compensation: $17.9 million
United Technologies has been one of the better performing
industrial conglomerates over the past year +11.6% and the stock
has outperformed the Dow, its home
index
. Blue chips across the board have largely lagged United
Technologies, so the money spent on this CEO seems well worth
it.
If you'd like to read about how some of the richest people in
the world invest their money, click
here
to see one of InvestingAnswers' most popular articles of the month,
5 Astonishing Billionaire Portfolios
.
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