CNN About-Face on CEOs: Higher Pay OK If Stock Is Doing Well
â€śAmericaâ€™s CEOs are raking in big, huge, fat wads of cash,â€ť said CNNâ€™s Stephanie Elam on the June 11 â€śAmerican Morning.â€ť
â€śFor example, letâ€™s start with the chairman of Yahoo!, Terry Semel. He pulled in $71.7 million last year and thatâ€™s been despite the fact Yahooâ€™s been completely behind Google in profit growth and stock performance,â€ť Elam said.
Elam and â€śAmerican Morningâ€ť host John Roberts then drew their own conclusions about when CEO pay is justified â€“ apparently itâ€™s okay as long as the company is doing well:
Elam: â€śAt the same time, Yahoo! stock was down 35 percent last year and he [Semel] is still making more and more money.â€ť
Roberts: â€śItâ€™s one thing to pay when a companyâ€™s doing well. Itâ€™s another thing to pay for failure.â€ť
Elam: â€śIt seems like shareholders donâ€™t mind if you make a lot while the company is doing well, but they donâ€™t like it when itâ€™s not doing so well.â€ť
Occidental Petroleum Corp. (NYSE: OXY) CEO Ray Irani was paid $400 million in 2006, after Occidentalâ€™s 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 CNNâ€™s report on the April 9 â€śAmerican Morningâ€ť presented it as excessive.
New York Times and CNN â€śMinding Your Businessâ€ť newsman Andrew Ross Sorkin speculated that unions might go after Occidental Petroleum because of Iraniâ€™s pay.
â€śYou think with a number like that they will. Iâ€™ve got to imagine,â€ť said then-anchor Soledad Oâ€™Brien.
Sorkin said Iraniâ€™s 2006 pay was one of the largest in history, even though Sorkin admitted it was a payout that took years to earn. â€śJust 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€ť Sorkin said.
Co-Anchor Miles Oâ€™Brien responded with a sarcastic â€śHard to get by on that.â€ť
â€śThe company has done well, to be fair,â€ť Sorkin added.