CNN About-Face on CEOs: Higher Pay OK If Stock Is Doing Well
âAmericaâs CEOs are raking in big, huge, fat wads of cash,â said CNNâs Stephanie Elam on the June 11 âAmerican Morning.â
âFor example, letâs start with the chairman of Yahoo!, Terry Semel. He pulled in $71.7 million last year and thatâs been despite the fact Yahooâs been completely behind Google in profit growth and stock performance,â Elam said.
Elam and âAmerican Morningâ host John Roberts then drew their own conclusions about when CEO pay is justified â apparently itâs okay as long as the company is doing well:
Elam: âAt the same time, Yahoo! stock was down 35 percent last year and he [Semel] is still making more and more money.â
Roberts: âItâs one thing to pay when a companyâs doing well. Itâs another thing to pay for failure.â
Elam: âIt seems like shareholders donât mind if you make a lot while the company is doing well, but they donât like it when itâs not doing so well.â
Occidental Petroleum Corp. (NYSE: OXY) CEO Ray Irani was paid $400 million in 2006, after Occidentalâs stock price went from $9 at the end of 1990 to nearly $50 in April 2006 â a more than 450-percent increase. Using Robertsâ logic, with a stock increase like that, Irani deserved a great pay package.
However, the tone of CNNâs report on the April 9 âAmerican Morningâ presented it as excessive.
New York Times and CNN âMinding Your Businessâ newsman Andrew Ross Sorkin speculated that unions might go after Occidental Petroleum because of Iraniâs pay.
âYou think with a number like that they will. Iâve got to imagine,â said then-anchor Soledad OâBrien.
Sorkin said Iraniâs 2006 pay was one of the largest in history, even though Sorkin admitted it was a payout that took years to earn. âJust 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,â Sorkin said.
Co-Anchor Miles OâBrien responded with a sarcastic âHard to get by on that.â
âThe company has done well, to be fair,â Sorkin added.