CNN About-Face on CEOs: Higher Pay OK If Stock Is Doing Well
“America’s CEOs are raking in big, huge, fat wads of cash,” said CNN’s Stephanie Elam on the June 11 “American Morning.”
“For example, let’s start with the chairman of Yahoo!, Terry Semel. He pulled in $71.7 million last year and that’s been despite the fact Yahoo’s been completely behind Google in profit growth and stock performance,” Elam said.
Elam and “American Morning” host John Roberts then drew their own conclusions about when CEO pay is justified – apparently it’s okay as long as the company is doing well:
Elam: “At the same time, Yahoo! stock was down 35 percent last year and he [Semel] is still making more and more money.”
Roberts: “It’s one thing to pay when a company’s doing well. It’s another thing to pay for failure.”
Elam: “It seems like shareholders don’t mind if you make a lot while the company is doing well, but they don’t like it when it’s not doing so well.”
Occidental Petroleum Corp. (NYSE: OXY) CEO Ray Irani was paid $400 million in 2006, after Occidental’s stock price went from $9 at the end of 1990 to nearly $50 in April 2006 – a more than 450-percent increase. Using Roberts’ logic, with a stock increase like that, Irani deserved a great pay package.
However, the tone of CNN’s report on the April 9 “American Morning” presented it as excessive.
New York Times and CNN “Minding Your Business” newsman Andrew Ross Sorkin speculated that unions might go after Occidental Petroleum because of Irani’s pay.
“You think with a number like that they will. I’ve got to imagine,” said then-anchor Soledad O’Brien.
Sorkin said Irani’s 2006 pay was one of the largest in history, even though Sorkin admitted it was a payout that took years to earn. “Just to be fair, this is money that has accumulated over the past several years. Had he not taken all these options he would have made just a paltry $55 million,” Sorkin said.
Co-Anchor Miles O’Brien responded with a sarcastic “Hard to get by on that.”
“The company has done well, to be fair,” Sorkin added.