Are Top CEOs Overpaid for Their Performance?

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CEOs are paid so handsomely because they bring something important to the company, right? Like bankruptcy, or a bailout?

While we’re debating whether fast-food workers deserve $15 an hour, maybe we should take a look at executive pay, too.

The Institute for Policy Studies released a new study of nearly 250 corporate chief executives who have ranked among the 25 highest-paid CEOs sometime in the past 20 years. It evaluated the performance — the study puts that word in scare quotes — of those highly compensated individuals and found there wasn’t a clear relationship between pay and good stewardship.

In fact, “nearly 40 percent of the CEOs on these highest-paid lists were eventually ‘bailed out, booted, or busted,'” the report says. Here are some other findings:

  • Richard Fuld of Lehman Brothers was one of the 25 best-paid CEOs for eight years straight — right up until his firm collapsed in 2008, in what CBS News called “the largest bankruptcy in history, and it triggered a chain reaction that produced the worst financial crisis and economic downturn in 70 years.” 
  • CEOs whose firms disappeared or were bailed out by taxpayers after the financial crash made up nearly a quarter of the study’s sample.
  • An additional 8 percent of studied CEOs were pushed out of the job, but left “with golden parachutes valued at $48 million on average.”
  • Another 8 percent led corporations that faced significant fraud-related fines or settlements, usually costing more than $100 million per firm.
  • Only four women CEOs were included in the study, meaning they were the only women who made the top 25 best-paid CEO lists over the past 20 years.
  • Three of the CEOs studied made more than $1 billion in inflation-adjusted pay over the past two decades: Lawrence Ellison of Oracle got $1.8 billion, Sanford Weill of Travelers and Citigroup got $1.5 billion, and Michael Eisner of Disney got $1.4 billion.

So, what about these folks? Do they deserve their millions? Should taxpayers be helping pay some of them? Let us know what you think on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

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