Top 8 Most Overpaid CEOs of Public Companies

When compared with their companies’ performance, these guys fall short

Cisco's John Chambers contemplating his dismal performance--or what to buy with his outsize pay. (Photo: AP) Cisco's John Chambers contemplating his dismal performance--or what to buy with his outsize pay. (Photo: AP)

Now that figures are out to show executive compensation at public companies—how much who made and where—there are some interesting tidbits to be had among all the numbers.

Some of the highest paid among the top 100 companies appear, according to data from GMI, an independent governance ratings firm, not to have earned their daily caviar—er, bread, at least when considering their annual income versus their companies’ financial health, as defined by stock price performance. In order to make the list, CEOs still had to be at the helm of the companies in question.

Here, for your edification (and possible concern), are AdvisorOne's eight most overpaid executives for 2010, when their pay is considered against the well-being of the companies they are running.

Total compensation, as represented here, includes base salary, perks, cash bonuses, equity awards and any increase in pensions and other retirement benefits. Stock performance data for 2010 came from Capital IQ.

Kevin Sharer, CEO of Amgen8. KEVIN SHARER:
Amgen
Stock Down 3%
Compensation $21 million

Sharer runs biotech company Amgen Inc., which saw its stock price fall by 3% in 2010. Sharer, on the other hand, saw his total compensation amount to some $21,138,133. Amgen’s shares were hurt by anemic sales of its drugs Epogen and Aranesp, which are used to treat anemia. It is also likely to suffer hemorrhaging in its bottom line due to some of its drugs going generic.

William Weldon of Johnson & Johnson7. WILLIAM WELDON:
Johnson & Johnson
Stock Down 4%
Compensation $28 million

Weldon heads up Johnson & Johnson, whose stock has fallen by 4% in 2010 as he took home a total of $28,720,491. Recalls have troubled the company, with 22 of them occurring in the 19-month period that ended in April.

One of the products recalled was Children’s Tylenol—and, as anyone knows, you don’t mess with anything to do with kids unless you want repercussions. Of course that has cost the company sales, and its forecast of $4.85 in earnings per share, made in January 2011, failed to meet analyst expectations of $4.99 per share for the year.

Robert Stevens of Lockheed6. ROBERT STEVENS:
Lockheed Martin
Stock Down 7.2%
Compensation $12 million

Lockheed Martin Corp. paid Stevens some $12,897,820, meanwhile, the company stock was falling 7.2%. The last five years in the market haven’t been kind to the company, either. Of course, part of the problem could be the looming defense cuts, but the F-35 program has seen more than its share of failed tests and delays; that doesn’t tend to increase confidence.

The company said in June that it would cut 6,500 workers from its rolls, but opted not to cut Stevens’ compensation.

William Swanson of Raytheon5. WILLIAM SWANSON:
Raytheon
Stock Down 10.1%
Compensation $18 million

Defense is not a happy industry these days. But its executives apparently are not included in the general gloom. Swanson, at Raytheon Co., has seen his company’s stock price fall 10.1% over 2010. Meanwhile, his payday totaled $18,787,343. Not bad for a company whose net income fell from $1.9 billion in 2009 to $1.8 billion in 2010—and is facing defense cuts as well, threatening its bottom line further.

Miles White of Abbott Labs4. MILES WHITE:
Abbott Laboratories
Stock Down 11.3%
Compensation $25 million

Abbott Laboratories has seen happier days, share price-wise, that is. In 2010 it fell 11.3%, but White took home $25,564,283.

Although Abbott spent freely to acquire businesses over the past few years, the move didn’t pay off any more than its product development has of late—no major new products, that’s zero major new products, brought to market in the past two years. So now it has announced that it’s taking those acquisitions and breaking them up. Uh, can you say counterproductive?

Adding to its less-than-rosy financial picture, its net income dropped from $5.7 billion to $4.6 billion. Say—there’s one place Abbott could save some money….

Laurence Fink of BlackRock3. LAURENCE FINK:
BlackRock
Stock Down 17.9%
Compensation $23 million

No! Not the Laurence Fink of BlackRock Inc.? The very same.

While he’s considered the best money manager in the world and recently made the Forbes “World’s Most Powerful People” list, BlackRock’s stock price lost a very scary 17.9% in 2010 despite a 53% increase in EPS. Investors paid a price for that loss, but Fink didn’t; he took home $23,839,294.

Tom Ward of SandRidge2. TOM WARD:
SandRidge Energy
Stock Down 22.4%
Compensation $21 million

In 2010, the stock price was down 22.4% at SandRidge Energy Inc., which Ward heads. The company owed $2.9 billion in long-term debt at the end of 2010 after spending like crazy for Permian Basin and Anadarko Shelf in an effort to switch from gas to liquid energy. It also lost $3.2 billion in the period 2008-2009. In 2010, net income was only $153 million—and that was an improvement. Meanwhile, Ward’s compensation package totals $21,756,257.

What’s wrong with this picture?

John Chambers of Cisco1. JOHN CHAMBERS:
Cisco Systems
Stock Down 31.4%
Compensation $18 million

Another company that has apparently diversified beyond its core competency and optimum acquisition level is Cisco Systems. With Chambers at the helm, it has seen its stock fall 31.4% as of the fiscal year ending July 30 and its stockholders suffer. Not so its CEO, however. Chambers collected a pay package worth $18,871,875.

He has backed away from additional M&As, but redirecting this bloated company is the financial equivalent of trying to turn the QEII on a dime.

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