CNN About-Face on CEOs: Higher Pay OK If Stock Is Doing Well
‚ÄúAmerica‚Äôs CEOs are raking in big, huge, fat wads of cash,‚ÄĚ said CNN‚Äôs Stephanie Elam on the June 11 ‚ÄúAmerican Morning.‚ÄĚ
‚ÄúFor example, let‚Äôs start with the chairman of Yahoo!, Terry Semel. He pulled in $71.7 million last year and that‚Äôs been despite the fact Yahoo‚Äôs been completely behind Google in profit growth and stock performance,‚ÄĚ Elam said.
Elam and ‚ÄúAmerican Morning‚ÄĚ host John Roberts then drew their own conclusions about when CEO pay is justified ‚Äď apparently it‚Äôs okay as long as the company is doing well:
Elam: ‚ÄúAt the same time, Yahoo! stock was down 35 percent last year and he [Semel] is still making more and more money.‚ÄĚ
Roberts: ‚ÄúIt‚Äôs one thing to pay when a company‚Äôs doing well. It‚Äôs another thing to pay for failure.‚ÄĚ
Elam: ‚ÄúIt seems like shareholders don‚Äôt mind if you make a lot while the company is doing well, but they don‚Äôt like it when it‚Äôs not doing so well.‚ÄĚ
Occidental Petroleum Corp. (NYSE: OXY) CEO Ray Irani was paid $400 million in 2006, after Occidental‚Äôs stock price went from $9 at the end of 1990 to nearly $50 in April 2006 ‚Äď a more than 450-percent increase. Using Roberts‚Äô logic, with a stock increase like that, Irani deserved a great pay package.
However, the tone of CNN‚Äôs report on the April 9 ‚ÄúAmerican Morning‚ÄĚ presented it as excessive.
New York Times and CNN ‚ÄúMinding Your Business‚ÄĚ newsman Andrew Ross Sorkin speculated that unions might go after Occidental Petroleum because of Irani‚Äôs pay.
‚ÄúYou think with a number like that they will. I‚Äôve got to imagine,‚ÄĚ said then-anchor Soledad O‚ÄôBrien.
Sorkin said Irani‚Äôs 2006 pay was one of the largest in history, even though Sorkin admitted it was a payout that took years to earn. ‚ÄúJust 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,‚ÄĚ Sorkin said.
Co-Anchor Miles O‚ÄôBrien responded with a sarcastic ‚ÄúHard to get by on that.‚ÄĚ
‚ÄúThe company has done well, to be fair,‚ÄĚ Sorkin added.